Attorneys representing the US SEC and Tron founder Justin Sun formally submitted a request to pause the ongoing legal battle. The sixty-day pause will allow the parties to explore settlement options.
Key Takeaways
- Justin Sun’s legal team joined the SEC in jointly requesting a 60-day halt to the legal contest as they consider settlement options.
- Sun is battling charges levelled by the SEC in March 2023, alleging wash trading and unregistered securities offerings of BTT and TRX tokens.
- Both parties submitted that pausing the ongoing legal battle will conserve judicial resources, thus beneficial to the public and the court.
- The joint request coincides with the court considering Sun’s motion to dismiss the charges.
- The request to pause development follows a shift in the SEC approach under the Trump administration, with several crypto-related cases being closed.
Crypto entrepreneur Justin Sun is eyeing a pause to the ongoing court proceedings in a joint application with the US Securities and Exchange Commission (SEC).
The parties submitted their application on Feb 26 requesting a 60-day stay from the New York Southern District Court Judge Edgardo Ramos. The joint request seeks to grant time for the sides to explore a potential settlement. This would allow them to address the differences without further litigation.
The submission by the attorneys representing both parties restated the pause grants mutual benefit. It would both save the court resources and satisfy the public interest.
Despite the submission, Judge Ramos has yet to rule on the request. This emerged as the court was weighing Sun’s motion to dismiss the case when the new filing from the parties.
Legal Battle
Justin Sun has been embroiled in a legal tussle with the US SEC since March 2023, when the regulatory agency alleged the entrepreneur and affiliate entities executed unregistered securities offerings. Besides Tron Foundation, other entities mentioned include Rainberry Inc. and BitTorrent Foundation.
The SEC alleged the entities participated in the unregistered sale of TRON (TRX) and BitTorrent (BTT) tokens.
Additionally, the SEC claimed Sun conducted wash trading through falsified buying and selling of assets to illustrate higher market activity. The agency submitted that Sun leveraged the wash trading to inflame the TRX trading volume, thus indicating the token active involvement in the market.
Celeb Endorsements
The complaint by the Commission extends to the involvement of celebrity endorsements. The SEC alleges Sun compensated celebrities for promoting the TRX and BTT tokens without explicit disclosure.
The celebrities mentioned in the Sun case include rapper Soulja Boy and actress Lindsay Lohan. The agency claims they promoted both tokens without informing the target audience they were earned from these endorsements.
A number of celebrities have settled with the SEC via fines payment, though they have not acknowledged wrongdoing.
Donald Trump Policy
The joint request to pause the proceedings emerged as the SEC seems to shift its approach to the digital assets regulation. The policy shift is evident since President Donald Trump’s return to the White House.
Most changes occurred after Gary Gensler exited the SEC on Jan 20. Drump has already settled on Mark Uyeda as acting chair, and they are awaiting confirmation of Paul Atkins as head of the SEC. The agency has so far dropped charges against Robinhood, OpenSea and Uniswap.
The game-changer began with crypto exchange Coinbase indicating the SEC’s principle-in-agreement to terminate the lawsuit. The exchange stated the previous week that the decision is pending the commissioners’ approval.
The developments raise concerns as Justin Sun recently acquired $70 million in World Liberty Financial (WLFI) tokens. The decentralized finance protocol is affiliated with President Donald Trump.
The Consumer Federation of America’s head of investor protection, Corey Frayer, is concerned with the troubling politicizing of the SEC, which seems to benefit Donald Trump’s business associates.
The legal teams illustrated in their filings that a move to request pause would not jeopardize the rights of any parties. They revealed plans to issue a joint status report within 60 days, updating on the progress. By press time, the parties have yet to finalize the agreement, and it is uncertain if Sun will acknowledge wrongdoing in an attempt to resolve it.
