The SEC has dropped its lawsuits against Justin Sun and his companies Tron Foundation, BitTorrent Foundation, and Rainberry, according to a court filing from Wednesday. This comes as both sides explore a resolution for the ongoing civil fraud case, which was first filed in March 2023.
The SEC had accused Justin of attempting to distribute billions of dollars in crypto assets in ways that of course violated US securities laws.
Both the SEC and Justin’s legal team have agreed to pause the case while they work out the details, proposing a 60-day delay before submitting a status report, per the filing, which was made after a letter was sent to US District Judge Edgardo Ramos in Manhattan, confirming their interest in reaching an agreement.
SEC closes Gemini investigation without any enforcement
In a related development, crypto exchange Gemini had its case officially dropped by the SEC on Wednesday after nearly two years of investigation.
For Gemini, the closing of the investigation ends a 699-day saga, which started with a Wells Notice issued 277 days earlier. This is yet another step toward ending what Cameron Winklevoss, co-founder of Gemini, calls the “war on crypto” led by the SEC.
In his statement on X, Cameron said, “While this marks another milestone to the end of the war on crypto, which already includes the SEC’s withdrawal of the Coinbase lawsuit and the closing of investigations into OpenSea, Robinhood, and UniSwap, it does little to make up for the damage this agency has done to us, our industry, and America.”
Cameron added that the SEC’s actions cost Gemini “tens of millions of dollars” in legal fees alone and potentially hundreds of millions in lost opportunities for innovation and productivity.
“The SEC’s behavior in aggregate towards other crypto companies and projects cost orders of magnitude more and caused unquantifiable loss in economic growth for America,” said Gemini’s Cameron.
“How many engineers left crypto or avoided it altogether because of these regulatory attacks? How many projects were never started or got off the ground because founders and engineers decided they would rather build a startup in their dorm room than inside the boardroom of a law firm trying to navigate the Kafkaesque crypto regulatory hellscape? How many engineers chose to go into other industries instead of building a permissionless, open financial system? How many years of innovation were kicked down the road at the expense of Americans? We will never know.”
But Cameron wasn’t just bitter about the past. He said that the SEC’s behavior shouldn’t go unpunished. “It’s wholly unacceptable for an agency like the SEC to bully, harass, and attack a lawful industry and then decide one day to simply say we’re good and walk away,” Cameron said.
Thoughtful legislation will form a shield of protection for the crypto industry, but Cameron thinks it also needs strong deterrence inside the agencies themselves, and he had a few ideas on how to get there. The first one is reimbursement.
Cameron said if an agency refuses to set clear rules before launching an investigation or enforcement action, they should be on the hook for 3x your legal fees. That way, you’d at least get reimbursed for the time and money spent defending yourself against what are basically bogus investigations and baseless enforcement actions.
These actions would never have happened if the SEC had just written rules in the first place. Better yet, they should have to pay your legal fees upfront so you’re not stuck paying out of pocket while you’re fighting to clear your name, said Cameron.
Cameron also said, “Everyone involved in these actions should be fired immediately and in a public way. Their names, roles, and the actions they participated in should be posted on the SEC website.”
How many SEC enforcement lawyers have resigned since the higher-ups at the SEC told them to back off crypto cases and close investigations? Zero, said Cameron. That tells you everything you need to know—these lawyers never believed in these cases from the start. So why didn’t they resign earlier when they were told to bring these unjust cases in the first place?
Cameron continued to say that shouldn’t be acceptable for the full force of the US government to go after young companies in an emerging industry, then hide behind some faceless agency and play the “I was just following orders” card. These people had a choice. They could’ve asked to be reassigned or quit. Nobody forced them to work for the SEC.
Cameron’s next idea was agency ban. Just like the SEC bans people from trading securities if they break the law, he thinks there should be a process that permanently bars people like former chairman Gary Gensler, who weaponize the law, and everyone who helped, from ever being hired or appointed to an agency again.
The Gemini founder believes the crypto industry can’t rebuild trust or integrity in federal agencies unless bad actors face serious consequences. Operation Chokepoint moved to version 2.0 because nothing was done to hold these bureaucrats accountable for their actions during version 1.0, said Cameron.
“Everyone involved in these actions should be fired immediately and in a public way. Their names, roles, and the actions they participated in should be posted on the SEC website,” Cameron said in his statement.
Jack Baughman, Gemini’s legal counsel, responded saying: “Everything Cameron says is true, and then some. The SEC approached this investigation with one goal: shut down the crypto industry. It was only because companies like Gemini and others were willing to stand up and take the hit that we’ve made it to this point. Smaller companies, especially those in other industries with fewer resources, are still at risk. There has to be a complete overhaul of how regulation is done, both at the federal and state levels.”
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