The Tron Foundation, the entity behind the first-tier blockchain Tron, has taken action against a lawsuit brought forth by the U.S. Securities and Exchange Commission (SEC) in a New York federal court. In a motion filed on March 28, the Foundation sought dismissal of the lawsuit, asserting that the SEC's focus on "primarily foreign conduct" oversteps its jurisdictional bounds, as it attempts to apply U.S. securities laws to activities conducted predominantly outside the United States.
In its defense, the Tron Foundation argued that the SEC's regulatory reach should not extend beyond U.S. borders, as it lacks the authority to regulate global transactions involving foreign digital assets. The Foundation emphasized that the tokens in question were sold exclusively overseas and were deliberately kept away from the U.S. market. Furthermore, it contended that the SEC did not assert any claims regarding the original offering or sale of the tokens to U.S. residents.
Addressing the SEC's allegations, the Tron Foundation challenged the characterization of subsequent token sales conducted on a U.S.-based platform as unregistered securities offerings. It deemed the SEC's stance on the matter as untenable, particularly under the Howey test, which determines whether an investment contract qualifies as a security. The Foundation asserted that the tokens in question do not meet the criteria for classification as investment contracts.
Additionally, the Tron Foundation disputed the SEC's accusations against Justin Sun, a key figure associated with the Foundation, regarding manipulative trading practices and undisclosed payments to celebrities for promotional purposes. It argued that the SEC's claims lacked substantial evidence and failed to demonstrate any wrongdoing that directly impacted individuals in the United States.
Furthermore, the Foundation raised procedural concerns regarding the lawsuit, alleging that the SEC's allegations lacked specificity and clarity, making it difficult for defendants to address the claims effectively. It also invoked the substantial question doctrine, a legal precedent emphasizing congressional authority over regulatory agencies, as grounds for dismissing the case. The SEC is expected to respond to the Tron Foundation's motion within the stipulated timeframe, while refraining from further commentary beyond public filings.
