The United States Securities and Exchange Commission (SEC) has updated its lawsuit against Tron founder, Justin Sun, and his crypto companies, Tron Foundation, the BitTorrent Foundation, and Rainberry, following Sun’s attempt to dismiss the litigation. The SEC claims that Sun traveled extensively to the U.S. on behalf of these entities, allegedly offering and selling unregistered securities in the form of Tronix (TRX) and BitTorrent (BTT). Sun challenged the SEC’s jurisdiction in a March dismissal, arguing that the agency was overstepping its authority by attempting to prosecute him.
Despite Sun’s dismissal motion, the SEC pressed forward with the lawsuit, charging him and several celebrities for illegally touting TRX and BTT without disclosing that they were compensated for doing so. The amended lawsuit comes amidst growing criticism of the SEC’s regulation-by-enforcement approach to the cryptocurrency industry, with critics arguing that the agency has failed to establish a clear regulatory framework for cryptocurrencies. Under Chair Gary Gensler, the SEC has pursued lawsuits against major crypto entities like Coinbase, Ripple, and Binance for alleged violations of federal securities laws.
The SEC’s crackdown on the crypto industry has faced backlash from industry players, with Sun challenging the agency’s jurisdiction and asserting that neither TRX nor BTT qualify as investment contracts or securities. Coinbase also attempted to dismiss its case against the SEC, claiming that the agency had exceeded its authority in claiming that the tokens sold were unregistered securities. However, the court ruled in favor of the SEC, allowing the lawsuit to proceed. Despite pushback, the SEC under Gensler’s leadership continues to pursue regulatory actions and has outlined further equity market structure rules and cybersecurity regulations in its agenda.
As the legal battle between Sun and the SEC continues, the cryptocurrency industry faces uncertainty over regulatory clarity and enforcement. Sun’s defense against the SEC’s allegations of selling unregistered securities highlights the challenges of jurisdictional issues in the global crypto market. The SEC’s approach to regulation through enforcement actions rather than clear regulatory frameworks has faced criticism, raising questions about the agency’s authority and oversight in the rapidly evolving crypto landscape. Despite ongoing legal challenges and criticisms, the SEC shows no signs of slowing down its crackdown on crypto entities for alleged violations of federal securities laws.
