27.02.2025
Mirjan Hipolito
Cryptocurrency and stock expert
27.02.2025

SEC and Justin Sun seek court pause to explore resolution in crypto case

SEC and Justin Sun seek court pause to explore resolution in crypto case SEC and Justin Sun seek court pause to explore resolution in crypto case

​The U.S. Securities and Exchange Commission (SEC) and Justin Sun, the founder of the Tron Foundation, have jointly requested a federal court to pause the regulator’s lawsuit against him and three of his companies. In a Feb. 26 filing to a Manhattan federal court, the parties expressed their intent to explore a potential settlement.

The request, submitted by the SEC, Sun, and his associated firms—Tron Foundation, BitTorrent Foundation, and Rainberry (formerly BitTorrent)—asks for a 60-day stay to discuss a resolution. “The Parties submit that it is in each of their interests to stay this matter while they consider a potential resolution,” the filing states. If approved, a joint status report will be submitted at the end of the period.

The SEC originally filed its lawsuit against Sun in March 2023, accusing him and his companies of selling unregistered securities through the issuance of Tron’s TRX and BitTorrent’s BTT tokens. The regulator also alleged fraudulent market manipulation, claiming Sun engaged in wash trading to artificially inflate trading volume. Additionally, the lawsuit accused Sun of violating securities laws by paying celebrities to promote the tokens without proper disclosures.

The case is part of the SEC’s broader crackdown on cryptocurrency firms allegedly operating outside U.S. securities laws. Several high-profile figures, including Lindsay Lohan, Jake Paul, and Akon, were implicated in the case for promoting Sun’s projects without disclosing financial compensation.

Potential implications for the crypto industry

If the SEC and Sun reach a settlement, it could mark a major resolution in one of the regulator’s most high-profile crypto enforcement actions. A settlement might also set a precedent for how other regulatory disputes involving token sales and crypto marketing practices are handled.

As regulatory scrutiny continues in the U.S., the outcome of this case could shape future compliance standards for crypto entrepreneurs and projects seeking to operate within the regulatory framework.

Read also: DeFi protocols see inflows while meme token hype declines

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