- SEC lawsuit versus Justin Sun and his companies goes too far, says Tron Foundation.
- TRX and BTT fail the Howey Test, argues Tron.
- Tron accounts for about 45% of illicit crypto transactions in 2023, according to a report from TRM Labs.
Tron (TRX) foundation submitted a 62-page document to a New York federal court on March 28, aiming to refute claims made by the Security and Exchange Commission (SEC) in a subpoena earlier issued to Justin Sun, the Tron Foundation, and other affiliated entities.
Tron lawyers question SEC’s jurisdiction
Tron has taken action in a New York federal court, seeking the dismissal of multiple charges against the Tron Foundation, BitTorrent Foundation, Rainberry Inc, and Justin Sun. The recent legal filing by representatives of these entities argues that the Securities and Exchange Commission (SEC) overreaches its jurisdiction by attempting to regulate “foreign defendants,” which they believe goes against principles of fair play and justice.
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Additionally, they contend that even if the token sales fall within US jurisdiction, TRX and BTT do not meet the criteria outlined in the Howey Test and thus cannot be classified as securities.
The SEC had previously accused Justin Sun and associated companies of orchestrating the unregistered offer and sale, manipulative trading, and unlawful promotion of crypto asset securities. However, Tron asserts that the SEC did not allege the sale of the tokens, TRX’s ICO and BTT’s IEO to any US person or account, thereby placing them outside the regulatory purview of the Commission.
Regarding the allegations of manipulative wash trading against Mr. Sun, Tron’s lawyers argue in its motion that the SEC failed to provide evidence that the trades were indeed “wash” trades intended for illegal purposes.
Tron concludes its response by asserting that the SEC’s attempt to expand its regulatory power to the global digital asset market represents an unprecedented and novel expansion of authority without clear congressional authorization. As such, Tron believes the case warrants dismissal by the courts.
Tron attractive to criminals
Tron’s response to the SEC comes at a time when a report by analysts at TRM Labs suggests that the Tron blockchain is attractive to criminals, accounting for 45% of illicit cryptocurrency transactions in 2023. The report also notes that Tron-based USDT has become a preferred token for North Korea-based hackers, who frequently exchange stolen funds on the platform.
