The recent filing of an amended complaint by the US SEC in its case against Justin Sun and other defendants has raised concerns and sparked debate. The amended complaint focuses on Justin Sun’s alleged visits to the US as a basis for asserting jurisdiction to pursue legal action. The regulator claims that Sun traveled extensively to the US while engaging in unregistered offers and sales of BTT and TRX tokens. These activities were carried out by Sun and several companies, including the Tron Foundation and the BitTorrent Foundation, who are also named as defendants in the case.
According to the SEC, Justin Sun spent over 380 days in the US between 2017 and 2019, conducting business trips to major cities such as New York City, Boston, Massachusetts, and San Francisco on behalf of the Tron Foundation and the BitTorrent Foundation. The regulator is using these visits as a basis for claiming jurisdiction over Sun and the companies to pursue regulatory and legal action in the US.
The amended complaint also alleges that Sun and the companies engaged in a wash trading scheme on the now-defunct crypto exchange Bittrex. While the original complaint mentioned similar wash trading activities, it did not specify the exchange where the trading occurred. By identifying Bittrex as a US-based platform, the SEC strengthens its claims to personal jurisdiction over Sun and the other defendants.
Communication with Bittrex
In addition to the wash trading allegations, the SEC included details about Sun’s personal communication with Bittrex and providing documents to the exchange in 2018 to list the TRX crypto. These documents link Sun to the other companies involved, as Sun personally signed some of them. These new allegations address Sun’s previous arguments for dismissal based on a lack of personal jurisdiction, as his interactions with Bittrex and presence in the US are now key aspects of the case.
In response to the allegations, defense lawyers previously argued that Sun, being a foreign national, should not be subject to US jurisdiction. They also questioned the alleged improper distributions on Bittrex and whether any US residents were affected by the actions of Sun and the companies. The original claims by the SEC indicated that sales targeting investors in the Southern District of New York and celebrity promoters contacting individuals in the US via social media were primary reasons for asserting jurisdiction.
Legal Ramifications and Conclusion
The SEC’s lawsuit against Justin Sun and other defendants, coupled with the separate lawsuit against Bittrex, has far-reaching implications for the crypto industry. The settlement with Bittrex and the global halt of operations by the company signal a shift in regulatory enforcement and the need for compliance within the sector. The outcome of the case against Sun and the companies will set a precedent for future actions by regulatory bodies in the US and abroad. As the legal proceedings unfold, the crypto community watches closely to see how the case will impact the industry as a whole.