The SEC’s Amended Complaint Against Justin Sun

The US SEC recently filed an amended complaint in its case against Justin Sun and other defendants, arguing that Sun’s alleged visits to the US should grant it the jurisdiction required to pursue legal action. According to the regulator, Sun traveled extensively to the US while he and several companies carried out unregistered offers and sales of BTT and TRX tokens. The SEC claimed that Sun spent over 380 days in the US between 2017 and 2019, making business trips to major cities such as New York City, Boston, and San Francisco on behalf of the Tron Foundation and the BitTorrent Foundation.

Claims of Wash Trading

The SEC alleged 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, the exchange on which the wash trading took place was identified as an unnamed “trading platform.” The SEC included the fact that Bittrex is based in the US as part of its claims to establish personal jurisdiction over Sun and the other defendants. The amended complaint also alleged that Sun personally communicated with and provided documents to Bittrex around 2018 in an effort to have the exchange list the TRX crypto.

Sun previously requested to dismiss the SEC case in March due to a lack of personal jurisdiction. His defense lawyers argued that as a foreign national, Sun is not “at home” in the US, a similar argument was advanced for the companies as well. The request for dismissal also addressed the supposed improper distributions on Bittrex but emphasized that there was no allegation that any US resident purchased or attempted to purchase TRX on the unidentified platform in question. However, the SEC’s amended complaint aims to counter these arguments by highlighting Sun’s extensive visits to the US and his involvement in business activities there.

The SEC initially sued Sun and the other defendants in March 2023, primarily focusing personal jurisdiction claims around the allegation that sales targeted investors in the Southern District of New York. Additionally, the SEC alleged that celebrity promoters contacted individuals in the US via social media. In April 2023, the SEC separately sued Bittrex, ultimately settling the case in August 2023. The company later ceased its operations globally in late 2023, marking a significant development in the aftermath of the legal action taken by the SEC.

The SEC’s amended complaint against Justin Sun and other defendants sheds light on the regulator’s efforts to establish personal jurisdiction over individuals and companies engaged in unregistered offers and sales of cryptocurrencies. The case underscores the regulatory scrutiny facing actors in the crypto space and the legal complexities involved in such matters. Justin Sun’s alleged visits to the US serve as a focal point in the SEC’s argument for jurisdiction, signaling the regulator’s intent to pursue regulatory and legal action in the US against the defendants.