Tron Founder Justin Sun Disputes SEC Lawsuit, Denies Targeting US Investors

Justin Sun has filed a motion to dismiss the SEC's lawsuit against him and his companies, Tron, BitTorrent, and Rainberry. Sun claims that he never intended to advertise TRX or BTT coins to US investors and that the ICOs were conducted "entirely overseas." The SEC alleges that Sun and his companies targeted US investors with unregistered securities offerings and celebrity endorsements.

Justin Sun Contests SEC Lawsuit, Denies Targeting US Investors

In a legal maneuver that has raised eyebrows, Justin Sun, the founder and former CEO of Tron (TRX) and BitTorrent (BTT), has filed a memorandum in the Southern District of New York, vehemently denying allegations by the United States Securities and Exchange Commission (SEC) that he and his companies violated US securities laws.

The SEC lawsuit, filed in January 2023, alleges that Sun and his firms engaged in unregistered securities offerings of TRX and BTT tokens, targeting American investors through various promotional campaigns and celebrity endorsements. The SEC seeks disgorgement of ill-gotten revenue, fines, and damages that could potentially exceed 300% of the revenue generated from the alleged unregistered securities sales.

In his response, Sun maintains that Tron and BitTorrent are legitimate technology platforms that promote content sharing and do not constitute securities offerings. He claims that the initial coin offerings (ICOs) for TRX and BTT were conducted "entirely overseas," despite ample evidence suggesting otherwise.

Sun's motion to dismiss the lawsuit relies heavily on the argument that the SEC's jurisdiction does not extend to Tron and BitTorrent's activities outside the United States. He contends that both platforms have a global reach and do not specifically target American investors.

However, this assertion contradicts the fact that BitTorrent is a household name in the US and that both Tron and BitTorrent have substantial English-language social media followings, with Sun himself having 3.5 million followers on Twitter. Additionally, Sun's own actions, such as paying for American celebrity endorsements of TRX and BTT, cast doubt on his claim that the offerings were not intended to reach US investors.

The SEC's complaint specifically cites celebrities Austin Mahone, with 8.6 million followers on Twitter, and Soulja Boy, with 5.3 million followers on Twitter, as having promoted TRX and BTT on behalf of Sun and his companies.

Despite the allegations against him, Sun has maintained a conspicuous absence from US soil for several years, a move that has fueled speculation about his motives.

Legal experts have expressed skepticism about Sun's defense strategy. Securities law expert Howard Fischer noted that the SEC has successfully pursued similar cases against other cryptocurrency companies that claimed to operate outside the US.

"The SEC has been very effective in pursuing these types of cases," Fischer said. "They have a broad reach and can go after anyone who is selling unregistered securities."

The outcome of the SEC's lawsuit against Sun and his companies remains uncertain. The court will need to weigh the evidence presented by both sides and determine whether the defendants violated US securities laws.

The case has significant implications for the broader cryptocurrency industry, as it represents a major test of the SEC's authority to regulate digital asset offerings. If the SEC prevails, it could set a precedent for the agency to pursue similar actions against other crypto companies, potentially affecting the industry's growth and regulatory landscape.