In March of 2024, legal issues emerged for Tron (TRX) as a lawsuit was filed by the SEC in New York. The lawsuit implicated Justin Sun, the Tron Foundation, and the BitTorrent Foundation for alleged securities violations related to TRX and BTT tokens.

The SEC accused them of promoting these tokens without proper registration, violating federal securities laws, and misleading investors. Adding complexity to the situation, individuals such as Soulja Boy, Lil Yachty, and others were involved in endorsing TRX and BTT. Moreover, concerns were raised about the role of USDT in facilitating illicit activities, especially in Southeast Asia.

A United Nations report in January of 2024 highlighted the misuse of USDT in money laundering and scams, notably in online gambling platforms in the region. Despite this, Sun addressed these concerns, disputing certain details related to USDT transactions on Tron’s TRC-20 protocol.

Tether also defended its actions, mentioning its contributions to law enforcement by helping freeze $225 million in USDT linked to a human trafficking group. Sun advocated for increased blockchain education and potential collaboration with the UN, while Tether expressed disappointment with the UN report.

Circle cuts ties with Tron

Circle, the issuer of stablecoin USD, announced its decision to discontinue support for USDC on the Tron blockchain in February of 2024. This was part of a phased transition, halting USDC minting on Tron immediately. Circle attributed this move to its risk management framework to maintain USDC’s reputation for trustworthiness and regulatory compliance.

In response, Binance declared that it would no longer facilitate deposits and withdrawals of USDC via the Tron network starting from April 5th. Following Circle’s lead, Tether did not provide a definitive stance on whether it would cease support for the Tron network.

What to expect next?

Regarding the SEC's lawsuit, Tron refutes the claims, asserting that its token sales were deliberately conducted overseas and excluded the U.S. market. The Tron Foundation challenges the SEC’s assertions of manipulative trading and celebrity endorsements, stating there's no evidence or identified victims.

Tron's legal defense is reminiscent of the arguments Coinbase used against the SEC, with hopes of dismissing the lawsuit. The community awaits the SEC’s response, as it could offer insight into the future of this legal dispute.

On another front, Tether faces tough regulations, particularly in the EU. With new regulations like the Markets in Crypto-assets Regulation (MiCA), Tether has encountered issues like OKX delisting its USDT trading pairs.

Moreover, figures in the cryptocurrency industry have called for legal action against Tether by U.S. authorities. Tether recently completed the SOC2 audit, ensuring effective IT controls for maintaining data and systems security.

Moving forward, Tether’s emphasis on regulatory compliance and security will remain vital amidst current developments.