The legal battle between the US Securities and Exchange Commission (SEC) and crypto entrepreneur Justin Sun has taken an interesting turn as they have mutually agreed to pause the proceedings in order to explore a potential settlement. This development was disclosed in a court filing submitted on Feb. 26, requesting a 60-day stay in the case in the US District Court for the Southern District of New York.
Both the SEC and Sun’s legal team believe that a pause in litigation would allow them to engage in negotiations for a resolution, thereby conserving judicial resources and benefiting the court and the public. The request is currently pending a ruling from Judge Edgardo Ramos.
The SEC initially filed a lawsuit against Sun in March 2023, alleging that the founder of Tron and his affiliated companies had conducted an unregistered offering and sale of securities through the distribution of TRON (TRX) and BitTorrent (BTT) tokens. The SEC also accused Sun of engaging in “wash trading” to manipulate market activity and inflate trading volume for TRX. Furthermore, the complaint included claims that Sun paid celebrities to endorse TRX and BTT without disclosing that they were compensated, leading to settlements with some of the celebrities.
The request to pause the case comes at a crucial juncture when the court was considering Sun’s motion to dismiss the lawsuit based on legal flaws in the SEC’s claims. If the stay is granted, the court would postpone ruling on the motion while discussions for a potential settlement continue. Both parties emphasized that the delay would not harm any party or affect court-imposed deadlines.
A stay in the case could indicate a willingness from both sides to explore a negotiated settlement, as is common in SEC enforcement actions against crypto firms and executives. However, the terms of any potential agreement, including whether Sun would admit to any wrongdoing, remain undisclosed.
As the legal battle between the SEC and Justin Sun unfolds, the outcome of the negotiations and the potential settlement will be closely watched by the crypto community and the broader financial industry. Stay tuned for updates on this developing story.