Key Points:
- The SEC has requested a 60-day stay in its fraud lawsuit against Justin Sun and his companies to explore a potential resolution.
- Both parties believe the pause serves public and mutual interests, with a status update planned after 60 days.
The U.S. Securities and Exchange Commission (SEC) has requested a 60-day pause in its fraud lawsuit against crypto entrepreneur Justin Sun and his three companies: Tron Foundation, BitTorrent Foundation, and Rainberry.
The motion is similar to recent filings in the SEC’s ongoing cases against major crypto exchanges Coinbase and Binance, where settlements are also being considered.
SEC and Justin Sun Request 60-Day Pause in Crypto Fraud Case
The SEC’s motion, filed jointly with Sun’s lawyers in a Manhattan federal court, seeks the stay while both parties explore a potential resolution to the case. The court filing did not specify whether the SEC aims to settle or drop the charges.
The SEC initially sued Justin Sun and his companies in March 2023, accusing them of orchestrating schemes to distribute billions of dollars in crypto assets and engaging in fraudulent practices.
One of the key allegations involves Sun’s attempts to inflate the trading volume of the TRX token through a method called wash trading. According to the SEC, employees of Tron Foundation conducted over 600,000 such trades to manipulate the market.
Sun has moved to dismiss the allegations, filing a motion to dismiss the case, arguing that the SEC lacks jurisdiction as the majority of the token sales occurred outside the U.S.
However, the SEC countered this claim, stating that Sun’s frequent travel within the U.S. provides grounds for its regulatory oversight. District Judge Edgardo Ramos, who is presiding over the case, previously denied the SEC’s motion to require further pre-trial responses from Tron.
In their letter to Judge Ramos, both Sun’s lawyers and the SEC requested the stay, noting that it would serve the interests of both parties and the public. They proposed submitting a status report after the 60-day period to update the court on the progress of negotiations.
Following the announcement, the TRX token has not changed much with it’s trading price at around $0.228 at the time of writing.
Regulatory Shift Signals Changing SEC Approach to Crypto
Justin Sun remains a key figure in the cryptocurrency industry, serving as the largest investor and an adviser to former President Donald Trump’s crypto platform, World Liberty Financial. His investment in the platform has reached $75 million following two substantial buy-ins.
Under the Trump administration, crypto companies seem to be breathing easier. The US President expressed his commitment to making the U.S. a global hub for cryptocurrency innovation, with supportive appointments to key regulatory positions.
The SEC also undergone a notable shift in its approach to crypto regulation under recent leadership. Acting SEC Chair Mark Uyeda has moved to close several high-profile crypto investigations, including probes into Coinbase, OpenSea, Robinhood, and Uniswap.
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