Tron Founder Justin Sun Files Motion to Dismiss SEC Lawsuit, Citing Lack of Jurisdiction

In an SEC lawsuit against Tron founder Justin Sun and affiliates, the defendants have filed a motion to dismiss due to alleged lack of regulatory guidance and jurisdiction. The motion criticizes the SEC's attempt to expand regulatory reach to predominantly foreign products and claims that the SEC has failed to provide clear guidance or establish a proper nexus between the US and the alleged unregistered securities offerings.

In a significant development, the founder of Tron (TRX), Justin Sun, along with the Tron Foundation and other defendants, have filed a motion to dismiss a lawsuit brought against them by the United States Securities and Exchange Commission (SEC). The motion, submitted on March 28th, 2023, alleges that the SEC lacks jurisdiction and has provided insufficient regulatory guidance.

The SEC initiated legal proceedings against the defendants a year ago, alleging that they had offered unregistered securities by issuing Tron (TRX) and BitTorrent (BTT) tokens. This action marked a significant step in the SEC's efforts to regulate the cryptocurrency industry.

In the motion, the defendants present a multifaceted defense, raising a number of objections to the SEC's claims and the regulatory approach it has taken.

Alleged Lack of Jurisdiction:

The defendants argue that the SEC lacks jurisdiction over their actions. They contend that the SEC has failed to demonstrate that it has personal jurisdiction over foreign defendants and that the products in question have a sufficient nexus to the United States.

The motion asserts that the SEC has attempted to assert jurisdiction by characterizing ordinary global secondary market trading, contests, giveaways, and airdrops as unregistered and improper U.S. securities offerings. However, the defendants argue that these activities do not meet the legal requirements for securities offerings under U.S. law.

Lack of Regulatory Clarity:

The defendants also assert that the SEC has not provided sufficient regulatory guidance regarding the classification and regulation of digital assets. They argue that the SEC's guidelines issued prior to the launch of TRX addressed activities that are distinct from the token functions at issue in this lawsuit.

Furthermore, the defendants contend that the SEC has relied on generalizations and conclusions to support its claims, rather than providing specific factual allegations. They argue that the SEC has not established the role of each individual defendant in each of its claims and has instead labeled all defendants collectively as "the Sun Defendants."

Violation of Due Process Rights:

The defendants also argue that the SEC's complaint fails to provide fair notice of the claims being asserted against them. They allege that the SEC has not provided sufficient information to enable them to adequately prepare a defense.

In light of these alleged deficiencies, the defendants argue that the SEC's complaint is subject to dismissal. They assert that the SEC has not met its burden of proof and that the court should dismiss the case in its entirety.

The SEC has yet to respond to the motion to dismiss. The outcome of this case will have significant implications for the regulation of digital assets and the role of the SEC in this emerging industry.

Related Developments:

In a related development, Edward Snowden has warned that the SEC is likely to suffer a major defeat in its lawsuit against Coinbase. Snowden's comments highlight the challenges that regulators face in applying traditional securities laws to the rapidly evolving cryptocurrency market.

As of the time of writing, Tron (TRX) is trading at $0.121 on the hourly chart. The cryptocurrency market remains volatile, and it is uncertain how the outcome of the SEC's lawsuit will impact the value of Tron and other digital assets.