Tron creator Justin Sun and SEC ask for time out to resolve potential issues
A court filing on February 26 states that the US Securities and Exchange Commission and Justin Sun, a crypto-entrepreneur, have agreed to put their legal dispute on hold while they look into a settlement.
The US District Court for Southern District of New York has filed a request to Judge Edgardo R. Ramos asking him to stay the matter for at least 60 day.
The SEC and Sun’s legal team said that a pause in litigation would allow for them to negotiate without the need of further litigation. This, they claimed, would benefit both the court as well as the public because it would save judicial resources.
The court has not yet ruled on the request.
SEC allegations
The SEC filed its lawsuit against Sun in March 2023, accusing the founder of Tron and his affiliated companies — Tron Foundation, BitTorrent Foundation, and Rainberry, Inc. — of engaging in the unregistered offering and sale of securities through the distribution of TRON (TRX) and BitTorrent (BTT) tokens.
The agency also alleged that Sun engaged in “wash trading,” a practice where an entity simultaneously buys and sells the same asset to create misleading market activity and inflate trading volume for TRX.
The SEC also alleged that Sun paid celebrities such as actress Lindsay Lohan, rapper Soulja Boy and actor David Hasselhoff to promote TRX, BTT and BTT, without disclosing the fact that they received compensation.
Many of these celebrities paid fines to the SEC without admitting guilt.
Potential impact
Sun’s motion dismissing the lawsuit is being reviewed by the court as it considers the request for a stay.
Sun’s lawyers had argued the SEC claims were legally flawed. They argued the case should be thrown away. If Judge Ramos grants a stay, then the court will delay any decision on the motion until the discussions are completed.
The SEC and Sun’s lawyers both stressed that the delay would not harm anyone, including non-parties. They also said that any court-imposed deadlines will remain intact. In the filing, the parties also said that they would provide a status report to the court within 60 days informing it if a settlement was reached or the case would continue.
The case being stayed could indicate that both parties are open to negotiation. Settlements were a common solution in similar SEC enforcement action against crypto firms and executives. Although no agreement has been finalized yet, it is still unclear whether Sun will accept any responsibility as part of an eventual resolution.
