The legal battle between the U.S. Securities and Exchange Commission (SEC) and Tron founder Justin Sun may soon take a different turn, as both parties have requested a 60-day stay to explore a potential settlement. The request, submitted to the U.S. District Court for the Southern District of New York on Feb. 26, seeks to halt proceedings while negotiations take place.

The joint motion argues that a temporary suspension of litigation would serve the interests of the court and the public by conserving judicial resources. If granted by Judge Edgardo Ramos, the stay would allow both parties to engage in settlement discussions without the ongoing burden of legal proceedings. While the court has yet to decide on the request, the move suggests that both the SEC and Sun see room for resolution outside of trial.

Background: The SEC’s Allegations

The SEC’s lawsuit, originally filed in March 2023, accused Sun and his affiliated companies—Tron Foundation, BitTorrent Foundation, and Rainberry, Inc.—of conducting unregistered securities offerings through TRON (TRX) and BitTorrent (BTT) token distributions.

The agency further alleged that Sun engaged in wash trading, a deceptive practice in which an entity simultaneously buys and sells the same asset to manipulate market activity and artificially inflate trading volume. Additionally, the SEC claimed Sun paid celebrities—including Lindsay Lohan and Soulja Boy—to promote TRX and BTT without disclosing their financial compensation, violating securities laws. Several celebrities implicated in the case later reached settlements with the SEC.

The timing of this request is significant, as the court was already reviewing Sun’s motion to dismiss the lawsuit. His legal team has consistently argued that the SEC’s claims are legally flawed and should be thrown out. If the stay is granted, the ruling on this motion will be postponed while negotiations continue.

The joint filing emphasized that the pause would not disadvantage any involved parties and that a status update would be provided within 60 days to determine whether a settlement was reached or if the case should proceed.

While this move indicates a willingness to negotiate, no final agreement has been made. A potential settlement could follow the pattern of previous SEC cases against crypto executives, where penalties and compliance agreements were reached without admission of wrongdoing.

If the court grants the stay, the next 60 days could be crucial in shaping the outcome of this case. A settlement could provide clarity for the crypto industry regarding SEC enforcement actions, while prolonged litigation may set further legal precedents for token offerings and market manipulation claims.

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