YEREVAN (CoinChapter.com) — The U.S. Securities and Exchange Commission (SEC) and Justin Sun

The U.S. Securities and Exchange Commission (SEC) and Justin Sun have asked a federal court to pause their civil fraud lawsuit.

The U.S. Securities and Exchange Commission (SEC) and Justin Sun have jointly requested a Manhattan federal court to pause their civil fraud lawsuit.

Both parties are considering a settlement and agreed to a 60-day stay to suspend legal proceedings, according to a Feb. 26 filing.

“In this case, the Parties submit that it is in each of their interests to stay this matter while they consider a potential resolution,” the motion reads in part.

If the court approves the request, the SEC and Sun will submit a joint status update within 60 days.

The SEC sued Sun and three of his companies—Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc. (formerly BitTorrent)—in March 2023. The lawsuit claims unregistered sales of TRX and BTT, market manipulation through wash trading, and payments to celebrities for undisclosed promotions.

The SEC alleges Sun engaged in massive-scale wash trading to inflate TRX’s market value. Additionally, the commission says celebrities were paid to promote TRX and BTT without disclosing their compensation.

Sun’s legal team countered that the SEC lacked jurisdiction because the alleged activities occurred outside the U.S. However, in April 2024, the SEC amended its complaint, presenting evidence of Sun’s substantial connections to the U.S., making it clear that the court had jurisdiction to hear the case.

The case has since been assigned to Judge Manuel Mendez Jr., who previously dismissed a lawsuit against hedge fund manager Steve Cohen for allegedly insider trading.

This development follows a pattern of the SEC settling or dropping lawsuits. Recently, the regulator dropped lawsuits against Coinbase (NASDAQ:COIN) and ended investigations into Uniswap and Robinhood (NASDAQ:HOOD).

The SEC is reportedly prioritizing cases with imminent deadlines. Lawsuits against Kraken and Ripple—which face court deadlines in March and April 2025—could also be affected by this initiative.

The move to settle with Sun also suggests the commission is changing its strategy for crypto enforcement. Under the Trump administration, the SEC has taken a different approach, staying or dismissing lawsuits against Binance and Coinbase.