SEC and Justin Sun Request Court to Stay Fraud Case

YEREVAN (CoinChapter.com) — The U.S. Securities and Exchange Commission (SEC) and Justin Sun have asked a federal court to pause their civil fraud lawsuit. In a Feb. 26 filing in the Manhattan federal court, both parties stated they are considering a settlement and requested a stay order to suspend legal proceedings.

The motion states:

“In this case, the Parties submit that it is in each of their interests to stay this matter while they consider a potential resolution.”

If the court approves the request, the SEC and Sun will submit a joint status update within 60 days.

SEC vs. Justin Sun: Major Fraud Allegations

The SEC sued Sun and three of his companies—Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc. (formerly BitTorrent)—in March 2023. The lawsuit claims unregistered sales of TRX and BTT, market manipulation through wash trading, and payments to celebrities for undisclosed promotions.

The SEC alleges Sun engaged in extensive wash trading to inflate TRX’s market value. Additionally, the commission says celebrities were paid to promote TRX and BTT without disclosing their compensation.

Sun’s legal team pushed back, arguing that the SEC lacked jurisdiction because the alleged activities took place outside the United States. However, in April 2024, the SEC amended its complaint, citing evidence that Sun had significant connections to the U.S.

SEC’s Shift in Crypto Lawsuits

This case follows a pattern of SEC settlements and case dismissals. Recently, the regulator dropped lawsuits against Coinbase and ended investigations into Uniswap and Robinhood.

The SEC has reportedly prioritized pausing cases with imminent deadlines. Lawsuits against Kraken and Ripple—which face court deadlines in March and April 2025—could also be affected.

The move to settle with Sun suggests the commission is reconsidering its crypto enforcement strategy. Under the Trump administration, the SEC has taken a different approach, staying or dismissing lawsuits against Binance, Coinbase, and other crypto firms.

Sun’s Crypto Investments and Legal Battle

Sun has also been involved in Donald Trump’s crypto platform, World Liberty Financial. He has invested $75 million in the project through two major buy-ins.

In November 2024, he purchased $30 million worth of World Liberty Financial tokens (WLFI), followed by another $45 million buy-in in early 2025.

This connection could play a role in the SEC’s decision to pause enforcement actions. The regulator has faced pressure to ease regulations under the current administration, which has positioned the U.S. as a crypto-friendly market.

What Comes Next in the SEC and Justin Sun Case?

The SEC’s lawsuit against Sun was one of its biggest crypto enforcement actions. If a settlement is reached, Sun could face financial penalties. However, details remain undisclosed.

The New York court will decide whether to approve the 60-day stay request. If granted, updates on the settlement negotiations will be expected in the coming months.

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