3 months ago
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The Tron ecosystem just scored a major win against the US SEC in a securities lawsuit that seeks to classify TRX as an investment contract.
The Tron ecosystem has won against the Securities and Exchange Commission (SEC), the United States financial regulator. A New York judge denied the Commission’s motion to expedite legal proceedings in its ongoing securities fraud case against the Tron Foundation and Sun, which recently acquired more Ethereum (ETH).
Tron Turns the Table on SEC
Recently, the regulator submitted a filing requesting a pre-trial conference in the Tron securities case. It also sought permission to submit additional responses in its lawsuit against the Foundation, its founder Justin Sun, the BitTorrent Foundation, and Rainberry Inc.
The SEC claimed that the defendants made new legal arguments regarding the so-called ‘common enterprise’ element of the Howey Test. Specifically, the defendants argued that the sales of TRX and BTT did not meet the third prong of the Test. This method is usually used to distinguish investment contracts under securities laws in the United States.
In the regulator’s opinion, the Tron Foundation violated legal norms by trying to sneak in an argument after they filed their motion to dismiss the case. Tron’s lawyers did not take the matter lightly as they responded with a missive to the U.S. District Court Judge Edgardo Ramos of the Southern District of New York (SDNY).
They accused the US regulator of “attempt[ing] to manufacture a controversy.” Furthermore, these lawyers requested that the court reject the Commission’s motion for a pre-trial conference.
The SEC’s request for leave to file an additional reply document allegedly “mischaracterizes and disregards Defendants’ argument about Howey’s third prong in this case (despite the point being in bold and italics),” Tron’s legal team argued. The recent development shows that Judge Ramos sided with these lawyers and immediately denied the SEC’s request.
“In light of defendants’ concession that they [are] not challenging the “common enterprise” element of the Howey test, the SEC’s letter motion to strike the untimely argument or for leave to file a sur-reply is DENIED,” the New York judge ruled.
SEC Accused of Overreaching
Unfortunately, this is a major setback for the regulator in the Tron securities lawsuit. The Tron Foundation is keen to demonstrate that the SEC is way past its jurisdiction in trying to impose US securities law for transactions in other regions. In response, the regulator noted that Tron’s founder traveled frequently within the US during the period in question.
Since the trips were connected to Tron and its related entities, the SEC argued that this is a sufficient basis for the United States to have jurisdiction over the case.
Amidst this lawsuit, the Tron Network has recorded positive sentiment on several key metrics. At the end of July, the number of daily active addresses on the Tron network increased from 1.59 million in January to about 2.42 million.
