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The U.S. Securities and Exchange Commission (SEC) has requested a court stay in their civil fraud lawsuit against Tron CEO Justin Sun. In a filing submitted on February 26, both the SEC and Sun have asked for the legal proceedings to be paused while they consider a potential resolution.
According to the motion filed in the Manhattan federal court, the parties believe it is in their best interest to suspend the matter while they explore settlement negotiations. The request includes an agreement to submit a joint status update within 60 days if the stay is approved.
The SEC had initially sued Sun and three of his companies – Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc. (formerly BitTorrent) in March 2023. The charges included allegations of unregistered sales of TRX and BTT tokens, market manipulation through wash trading, and payments to celebrities for undisclosed promotions.
The lawsuit claims that Sun engaged in extensive wash trading to artificially inflate TRX’s market value, and also paid celebrities to promote TRX and BTT without disclosing their compensation. In response, Sun’s legal team argued that the SEC lacked jurisdiction due to the alleged activities taking place outside of the United States. However, in April 2024, the commission amended its complaint, citing evidence that Sun had significant connections to the U.S.
This move follows a pattern of recent SEC settlements and case dismissals. In recent weeks, the regulator has dropped lawsuits against Coinbase and ended investigations into Uniswap and Robinhood. The agency is reportedly prioritizing pausing cases with imminent deadlines. Ongoing lawsuits against Kraken and Ripple could also be impacted by this shift in strategy.
The connection between Sun’s crypto investments and his involvement with Donald Trump’s crypto platform, World Liberty Financial, may also play a role in the SEC’s decision to pause enforcement actions. The regulator has faced pressure from the current administration to ease regulations and promote the U.S. as a crypto-friendly market.
As the court weighs the request for a stay, the possibility of a settlement and its potential implications remain unclear. If approved, updates on the negotiations will be expected in the coming months.
