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Tron Questions SEC’s Global Authority Over Crypto Offerings to Non-U.S. Buyers

Tron's dismissal plea against SEC's regulatory overreach

To counteract the U.S. Securities and Exchange Commission's (SEC) lawsuit, the Tron Foundation has unequivocally stated that the SEC oversteps its jurisdiction with its global regulatory ambitions. Asserting its position, Tron has officially requested a New York federal court to dismiss the SEC's case, which it believes unfairly targets activities predominantly outside the U.S. sphere of influence. 

Tron emphasized in a dismissal motion filed on March 28, challenging the SEC's attempt to extend U.S. securities laws to actions that are largely international:

"The SEC is not a worldwide regulator," 

This lawsuit stems from the SEC's March accusations against Tron Foundation leaders and related entities for allegedly conducting unregistered securities offerings of Tron (TRX) and BitTorrent (BTT) tokens. Tron's defense highlights a crucial debate on the SEC's reach over digital asset offerings on global platforms, especially those directed at foreign purchasers.

The core of Tron's argument: jurisdiction and securities classification

Tron's defense against the SEC's allegations centers on two pivotal arguments: the lack of the SEC's authority over international digital asset transactions and the misclassification of its tokens as securities. Tron asserts that its token sales were conducted "entirely overseas," deliberately avoiding the U.S. market to sidestep such regulatory entanglements. According to Tron, not a single sale was initially made to U.S. residents, undermining the SEC's claim that subsequent secondary sales on U.S.-based platforms equate to unregistered securities offerings within the United States. 

Furthermore, Tron challenges the SEC's application of the Howey test for determining a security, arguing that even if the SEC had jurisdiction, Tron and BitTorrent tokens do not meet the criteria for investment contracts under U.S. law. This stance not only questions the SEC's regulatory reach but also dives deep into the ongoing debate over the classification of digital assets and their treatment under securities law.

Tron's defense: no victims, no fraud

In its motion to dismiss the SEC lawsuit, Tron articulates a robust defense, notably highlighting the absence of concrete victims and disputing allegations of fraudulent activities. Tron points out the SEC's failure to present "particularized facts" that would demonstrate the trades in question were indeed "wash trades" executed for illicit purposes. 

Tron contested:

"No particularized facts show that the trades were actually 'wash trades,' wrongfully executed for illegitimate purposes (much less affecting anyone in the United States)," 

Moreover, the company criticized the SEC for not identifying a single individual harmed by the alleged actions, adding weight to their argument for dismissal. Tron's motion further criticizes the SEC's reliance on "generalizations and conclusions to support its already thin, frequently indiscernible claims," challenging the foundation of the SEC's lawsuit. By disputing the presence of victims or fraudulent misrepresentations, Tron seeks to undermine the SEC's case and advocate for the dismissal of the charges against it.