Tron files motion to dismiss latest ICO lawsuit

The Tron Foundation has petitioned a New York federal court to dismiss a class action lawsuit against it, after calling the claims on which it is based “fatally flawed.”

The lawsuit against Tron was brought following allegations of securities law violations, following the foundation’s $70 million initial coin offering (ICO) in 2017. Alleging the case has “no connection” to New York and that the plaintiffs did not take part in the original token sale, Tron recently filed a motion to dismiss the case.

The motion also accuses the lead plaintiffs of filing the lawsuit some two years after completion of the ICO: “Despite having not purchased during the initial offering or from Tron, plaintiffs attempt to form a nexus between their purchases and alleged marketing activities by Tron.”

According to the motion, the lead plaintiffs allegedly purchased tokens through a secondary exchange, namely Binance, which Tron believes would invalidate claims under securities laws—laws which do not cover secondary market transactions.

As a result, the Tron Foundation has said the decision to purchase the TRX tokens several years after the ICO has no connection to their alleged actions.

The motion also rejects allegations that the 2017 Tron whitepaper was misleading because it says the tokens are not a security, described in the motion as an “afterthought.”

“This claim was not even pleaded in the original complaint, and it is nothing but a litigation afterthought.”

The lawsuit was filed with the court back in April this year, alongside 10 other similar lawsuits filed in the Southern District of New York that day. All of the claims alleged the distribution of unregistered securities.

The Tron ICO ran from August to September 2017, raising $70 million from the sale of TRX tokens for the Foundation.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to BinanceBitcoin.comBlockstreamShapeShift and Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.

New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.