Justin Sun 'travelled extensively' in the US, demonstrating jurisdiction, SEC argues in updated complaint

Tron TRX +2.41% founder Justin Sun "travelled extensively," spending more than 380 days in the U.S. from 2017 to 2019 while certain tokens were being promoted and sold, the Securities and Exchange Commission said in an updated complaint.

During that period, Sun spent time in a few cities in the U.S., including New York City, Boston and San Francisco. The agency said that Rainberry, the name Sun gave BitTorrent when he acquired it in 2018, rented an apartment where the crypto entrepreneur stayed during his business trips in 2019. 

"The Court has personal jurisdiction over Defendants because, through their conduct alleged herein, they purposefully took actions in and directed toward the United States," the SEC said in the updated document filed on Thursday. 

In March 2023, the SEC charged Sun and his three companies — Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc. — for allegedly offering and selling Tronix and BitTorrent as investments “through multiple unregistered ‘bounty programs.’” Those cryptocurrencies also go by TRX and BTT. The SEC had also alleged that Sun directed wash trading of TRX. 

The SEC charged a few celebrities, including actress Lindsay Lohan and media personality Jake Paul, for “illegally touting” TRX and BTT without disclosing that they were being paid last year. Lohan and Paul agreed to settle the charges without admitting or denying the SEC's findings. Singers Austin Mahone and DeAndre Cortez Way, also known as Soulja Boy, are still named on the amended complaint. 

Blurring the lines

The SEC added in its amended complaint that Sun "blurred the distinctions" among his three companies. During public appearances in San Francisco, Sun promoted the Tron ecosystem, TRX, and BTT while also displaying the Tron logo, the Tron name, and the BitTorrent name. 

"Based on Sun’s actions and statements, a reasonable investor considering whether to purchase or sell TRX or BTT would see Sun as the face of the Tron ecosystem, TRX, and BTT, and little, if any, meaningful distinction among the Tron Foundation, the BitTorrent Foundation, and Rainberry," the SEC said. "With respect to all of his conduct alleged herein, Sun acted intentionally or recklessly."

Sun's lawyers filed a motion to dismiss the original complaint last month, arguing that the SEC is not a "worldwide regulator."

"Its efforts to leverage highly attenuated contacts to the United States, to extend U.S. securities laws to cover predominantly foreign conduct, go too far and should be rejected," the lawyers said.