The recent amended complaint filed by the US SEC against Justin Sun and other defendants has raised eyebrows in the legal and cryptocurrency communities. The argument that Sun’s alleged visits to the US should grant the SEC the jurisdiction required to pursue legal action seems tenuous at best. While it is true that Sun spent a significant amount of time in the US between 2017 and 2019, does that alone justify the SEC’s claims of jurisdiction over him and the companies involved in the case?
The Wash Trading Allegations
One of the key aspects of the SEC’s case revolves around allegations of wash trading on the crypto exchange Bittrex. The SEC claims that Sun and the companies engaged in a wash trading scheme on Bittrex, a US-based exchange. However, the fact that Bittrex is based in the US should not automatically give the SEC jurisdiction over Sun and the other defendants. It is crucial to examine the evidence and legal precedents carefully before making such sweeping claims.
The Personal Jurisdiction Issue
Sun’s defense lawyers argued that he is a foreign national and not “at home” in the US, casting doubt on the SEC’s claims of personal jurisdiction. The request for dismissal highlighted the lack of specific allegations regarding US residents purchasing or attempting to purchase TRX on the unidentified platform where the alleged improper distributions took place. These arguments point to the complexity of the jurisdictional issues at play in this case.
The SEC’s decision to sue Sun and the other defendants in March 2023 was based on claims that sales targeted investors in the Southern District of New York and that celebrity promoters contacted individuals in the US via social media. While these allegations may carry weight, the connection to Sun’s visits to the US and the wash trading activities on Bittrex remains questionable.
It is worth noting that the SEC separately sued Bittrex in April 2023 and settled the case in August 2023. The fact that Bittrex, a key player in the allegations against Sun and the other defendants, decided to settle with the SEC raises further questions about the strength of the SEC’s case. If Bittrex, the platform where the alleged wash trading took place, was willing to settle, what does this say about the viability of the SEC’s claims against Sun and the other defendants?
The SEC’s case against Justin Sun and others raises complex jurisdictional and enforcement issues that must be carefully examined. While the allegations of wash trading and improper distributions are serious, the connection to Sun’s visits to the US and the jurisdictional basis for the SEC’s claims may not be as clear-cut as initially presented. As the case unfolds, it will be crucial to scrutinize the evidence and legal arguments on both sides to determine the validity of the SEC’s enforcement actions.