SEC, Justin Sun, and Tron Look to Resolve Fraud Case

The US Securities and Exchange Commission (SEC) has recently dropped several legal actions against crypto firms, including lawsuits against Coinbase and investigations into Uniswap and Robinhood.

Coinbase CEO Brian Armstrong confirmed that the SEC agreed to dismiss its case against the exchange, pending commissioner approval.

Now, the agency is seeking to resolve one of its most high-profile cases—its lawsuit against Tron founder Justin Sun.

On 26 February, the SEC, Sun, and three of his companies jointly requested a Manhattan federal court to pause proceedings, allowing time to explore a potential settlement.

The filing stated:

"In this case, the Parties submit that it is in each of their interests to stay this matter while they consider a potential resolution and agree that no party or non-party would be prejudiced by a stay. Further, a stay is in the Court’s and the public’s interest because a resolution would conserve judicial resources by obviating the need for the Court to resolve the Defendants’ pending motion to dismiss the complaint."

If approved, the stay would halt further legal action for 60 days while both parties work toward a resolution.

While details remain unclear, a settlement could lead to penalties for Sun, ultimately bringing the case to a close.

SEC’s 2023 Lawsuit Against Sun and His Companies

In March 2023, the SEC filed a lawsuit against Justin Sun and his companies—Tron Foundation, BitTorrent Foundation, and Rainberry (formerly BitTorrent)—alleging they sold unregistered securities through the TRX and BTT token sales.

The regulator also accused Sun of orchestrating a market manipulation scheme, citing over 600,000 alleged wash trades conducted by Tron Foundation employees.

Additionally, the lawsuit claimed Sun paid celebrities to promote TRX and BTT without disclosing their compensation, violating securities laws.

District Court Judge Edgardo Ramos, overseeing the case, denied the SEC’s attempt to compel Tron to file additional pre-trial responses.

Tron previously sought to dismiss the lawsuit, arguing that the SEC lacked jurisdiction since the activities occurred outside the US.

However, in April 2024, the SEC amended its complaint, citing new evidence of Sun’s US ties.

By October 2024, a US District Court also rejected a motion to dismiss a class-action lawsuit filed by TRX investors.

Now, as the SEC shifts its stance on crypto enforcement, its willingness to negotiate a settlement suggests a broader move toward resolving past cases rather than aggressively pursuing litigation.