US Court Rejects SEC's Request for Pre-Trial Discovery in Justin Sun Case

US Court Rejects SEC's Request for Pre-Trial Discovery in Justin Sun Case

The New York court has dismissed the Securities and Exchange Commission's (SEC) request to compel pre-trial discovery or elicit further pleadings related to its securities fraud lawsuit against Tron (TRX) founder Justin Sun, according to Coindesk. The SEC had sought pre-trial discovery, arguing that Tron failed to meet the requirements of the Howey Test despite filing a motion to dismiss. The decision is a setback for the SEC, which has been investigating Tron since 2018 and filed a lawsuit against Justin Sun, BitTorrent, the BitTorrent Foundation, and the Tron Foundation in March 2023. The SEC alleges that TRX is a security and that the defendants manipulated its secondary market. In its motion to dismiss, Tron argued that TRX is not a security and that the SEC's case is without merit. The court agreed with Tron's argument and dismissed the SEC's case in May 2023. The SEC's request for pre-trial discovery was an attempt to gather more evidence to support its case. However, the court ruled that the SEC had not shown good cause for pre-trial discovery and that the SEC's request was premature. The court's decision is a victory for Tron and Justin Sun. It is also a setback for the SEC, which has been criticized for its aggressive enforcement of securities laws against cryptocurrency companies.