- The Tron Foundation has requested the dismissal of its case against the SEC, arguing that applying US securities laws to predominantly foreign conduct is unjustified
- It emphasized that token sales occurred overseas and did not involve initial sales to US residents
- Despite being based in Singapore, the Foundation faces scrutiny if US residents initially purchased the tokens
The Tron Foundation has asked the judge overseeing its case against the Securities and Exchange Commission (SEC) to dismiss it. The Foundation filed its dismissal last week, claiming that the SEC’s attempts to apply US securities laws to predominantly foreign conduct are unjustified because the token sales were conducted entirely overseas and did not involve initial sales to US residents. It also highlighted that both the Tron Foundation and BitTorrent Foundation are based in Singapore with no presence in the United States, but this won’t matter if US residents managed to purchase the tokens at the outset.
SEC Says BTT and TRX are Securities
The SEC sued the Tron Foundation, accusing it of “the orchestration of the unregistered offer and sale, manipulative trading, and unlawful touting of crypto asset securities,” charges that Tron founder Justin Sun denied. The BitTorrent Foundation and video-on-demand platform Rainberry were also accused of offering and selling securities through Tron (TRX) and BitTorrent ICO tokens (BTT).
Sun was personally accused of engaging in wash-trading to artificially inflate TRX prices, which he also denied:
The SEC’s civil complaint earlier today is just the latest example of actions it has taken against well known players in the blockchain and crypto space. We believe the complaint lacks merit, and in the meantime will continue building the most decentralized financial system.
— H.E. Justin Sun 孙宇晨 (@justinsuntron) March 23, 2023
The Tron Foundation last week made these objections concrete, opening its filing with a shot at the SEC, calling the suit “Yet another salvo in the SEC’s ever-widening campaign seeking dominion over digital assets whenever created, in whatever form, for whatever purpose, and wherever they may be found, this action levels a series of hyperbolic “securities” claims against two foreign entities and a foreign national.”
Tron Foundation: SEC is Not a Worldwide Regulator
The Foundation stated its belief that the allegations “lack specificity and are unrelated in time and substance to the great weight of the alleged wrongdoing,” adding that there is no evidence to support allegations of wash-trading or harm to US-based individuals with the token sales.
Its main argument, however, is that the SEC’s lawsuit unfairly targets foreign entities and individuals, asserting that the regulator lacks jurisdiction over transactions conducted outside the United States, arguing that the SEC “is not a worldwide regulator.”
The Foundation’s premise is similar to that seen in other cases over the years, meaning that it will have to prove that no US-based buyers managed to get their hands on even one token for the token sale. This put a lot of pressure on its KYC processes at the time, which, as many can attest, were not the most robust and did not deter those from supposedly blocked countries from accessing the sales.
