US SEC Escalates Legal Battle Against Justin Sun with Amended Lawsuit

by BSC News

April 19, 2024


In its lawsuit, the SEC accuses Sun of manipulating wash trading on Bittrex by selling unregistered securities through TRX and BTT tokens.

The U.S. Securities and Exchange Commission (SEC) has intensified its legal actions against Justin Sun, the founder of Tron, by filing an amended lawsuit that asserts "personal jurisdiction" over him due to his substantial activities in the United States. 


This development comes in response to Sun's previous motion to dismiss the lawsuit, in which he argued that the SEC lacked jurisdiction over his actions and the Singapore-based Tron Foundation.

Strengthening Jurisdiction Claims

The SEC's amended filing in a Manhattan federal court highlights Justin Sun's extensive presence in the U.S. over several years, notably from 2017 to 2019, where he spent approximately 380 days. 


During this period, Sun engaged in business-related travel to major cities such as New York City, Boston, and San Francisco. The complaint also mentions Sun's stays at a U.S.-based apartment rented by Rainberry, a company implicated in the lawsuit, which further ties him to domestic activities.

Details of Alleged Regulatory Violations

The core of the SEC's allegations remains unchanged in the amended complaint, which reiterates that Sun and his associated entities, including the Tron Foundation and BitTorrent Foundation. He is allegedly engaged in the sale of unregistered securities through TRX and BTT tokens. 


Moreover, the SEC accuses Sun of participating in manipulative wash trading practices, specifically highlighting these activities on the Seattle-based cryptocurrency exchange, Bittrex.


The SEC notes that Sun's travel and business operations in the U.S. coincided with the promotion, offering, and sales of TRX and BTT tokens directly to U.S. consumers and investors. This point is critical as it directly connects Sun’s activities with the alleged regulatory breaches within U.S. jurisdiction.


In his defense, last March, Sun maintained that the sales of TRX and BTT tokens occurred entirely overseas and that deliberate efforts were made to avoid the U.S. market. 


He has also pointed out that the SEC has not explicitly claimed that the tokens were initially offered or sold to U.S. residents. 

Implications of the Amended Lawsuit

If the court upholds the SEC's argument for personal jurisdiction based on Sun's engagements in the U.S. and his direct interactions with U.S.-based entities like Bittrex, this could establish a landmark case. 


It would potentially widen the scope of U.S. regulatory authority over international cryptocurrency activities, especially those that have tangible connections to U.S. consumers and financial markets.


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