TRON Foundation Demands SEC Lawsuit Dismissal, Citing Extraterritorial Overreach

TRON Foundation asserts the SEC's overreach in a lawsuit targeting Tron tokens, claiming extraterritorial jurisdiction and inadequate evidence to support allegations of unregistered security offerings, manipulative trading, and paid endorsements. The Foundation argues the SEC lacks authority, as token sales occurred exclusively abroad and were not directly marketed to US residents. They further challenge the SEC's ability to prove harm or identify victims and contend that the lawsuit's allegations are based on impermissible generalizations and assumptions.

TRON Foundation Demands Dismissal of SEC Lawsuit, Asserting Extraterritorial Overreach

Singapore, April 27, 2023 - The TRON Foundation has filed a motion to dismiss a lawsuit brought against it by the United States Securities and Exchange Commission (SEC), vehemently asserting that the agency's regulatory authority does not extend to activities conducted primarily outside the United States.

This legal battle stems from a lawsuit filed by the SEC in March 2023, accusing crypto billionaire Justin Sun and three related entities of violating U.S. securities laws by selling unregistered securities in the form of TRON (TRX) and BitTorrent (BTT) tokens. The TRON Foundation, based in Singapore, contends that the SEC's jurisdiction does not encompass foreign digital asset offerings sold to international buyers on a global stage.

The Foundation maintains that the token sales in question were conducted exclusively abroad and that all necessary measures were taken to avoid targeting the U.S. market. Moreover, the defendants argue that the SEC has failed to demonstrate that the tokens were initially sold or offered to U.S. residents.

"The SEC is not a regulator of the world," the Foundation declared in its motion to dismiss. "Defendants' alleged conduct occurred outside the United States, involved foreign purchasers, and did not target the U.S. market."

The motion further contends that the SEC's claim that subsequent secondary token sales on U.S.-based platforms serving global users violates U.S. securities laws is "factually and legally deficient." It argues that such transactions do not constitute investment contracts under U.S. law and that the SEC has provided no evidence to support its allegations.

The lawsuit also accuses Sun of engaging in manipulative wash trading and indirectly paying celebrities such as Soulja Boy and Akon to endorse TRON-related tokens. However, the TRON Foundation refutes these claims, asserting that the SEC has failed to provide any evidence that the trading practices were intended to harm investors or had any connection to the United States.

The Foundation also criticizes the SEC for failing to identify any victims of the alleged misconduct, arguing that the agency's case is based on "generalized and conclusory allegations that are impossible to prove."

The TRON Foundation's motion to dismiss invokes the doctrine of primary jurisdiction, citing Supreme Court precedent that holds that the SEC lacks authority over foreign transactions that do not have a substantial connection to the United States. This legal argument aligns with similar tactics employed by other cryptocurrency companies such as Kraken and Coinbase in their attempts to dismiss SEC lawsuits.

The SEC is expected to respond to the TRON Foundation's motion within two weeks, setting the stage for a potentially significant legal battle that will determine the scope of the SEC's regulatory authority over digital asset trading and its extraterritorial reach. This case highlights the challenges and complexities involved in applying traditional securities laws based on national jurisdictions to the inherently global and decentralized nature of the cryptocurrency industry.