APENFT (nft) 
Recent legal challenges have had a significant impact on Tron’s trajectory and raise questions about Tether’s future.
In 2023, Tron (TRX), led by Chinese entrepreneur Justin Sun, accounted for 45% of all illicit crypto transactions, up from 41% the previous year. Ethereum (ETH) followed at 24%, and Bitcoin (BTC) at 18%. Blockchain addresses linked to terrorist financing activities on Tron surged by 125%, particularly those involving the stablecoin Tether (USDT). USDT remains a top choice for criminal activities, with over $19 billion in illicit funds, surpassing other stablecoins like USD Coin (USDC).
Tron’s low fees and quick transactions make it attractive to bad actors, leading to its preference among hackers linked to North Korea. These hackers often convert stolen funds into USDT on the Tron network and then launder them through high-volume over-the-counter brokers.
Despite these alarming statistics, TRM Labs reported a decrease in hacked and sanctions-exposed fund volumes, possibly due to increased pressure from governments and law enforcement agencies worldwide.
Amidst these developments, Justin Sun and the Tron Foundation have faced legal scrutiny, including charges from the U.S. SEC for unregistered offerings and market manipulation.
Brewing Troubles for Tron and Tether
In March 2024, Tron (TRX) faced legal challenges as the SEC filed a lawsuit in New York’s Southern District. The lawsuit implicated Sun, the Tron Foundation, and the BitTorrent Foundation for alleged securities violations related to TRX and BitTorrent (BTT) tokens. The SEC accused them of promoting these tokens without proper registration, violating federal securities laws, and misleading investors. High-profile celebrities such as Soulja Boy, Lil Yachty, Austin Mahone, Lindsay Lohan, Jake Paul, and Akon were involved in endorsing TRX and BTT, adding complexity to the situation.
Concerns also arose about USDT’s role in facilitating illicit activities, particularly in Southeast Asia. A January 2024 United Nations report highlighted the misuse of USDT in money laundering and scams through online gambling platforms in the region. Sun addressed these concerns in a post, emphasizing Tron’s commitment to combating blockchain misuse.
Tether defended its role, mentioning contributions to law enforcement, such as helping freeze $225 million in USDT linked to a human trafficking group. Sun advocated for increased blockchain education and potential collaboration between TRON, HTX DAO, and the UN. Tether expressed disappointment with the UN report, refuting allegations of involvement in illicit activities and citing its dedication to facilitating financial inclusion.
Circle Cuts Ties with Tron
Circle announced its decision to discontinue support for USDC on the Tron blockchain in February 2024, part of a phased transition to uphold 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, effective Apr. 5.
Following Circle’s lead, Tether did not provide a definitive stance on whether it would cease support for the Tron network, leaving the possibility open for future developments.
What to Expect Next?
Tron refutes the SEC’s claims, asserting that its token sales were conducted overseas and excluded the U.S. market deliberately. Tron Foundation challenges the SEC’s assertions of manipulative trading and celebrity endorsements, seeking to dismiss the lawsuit using legal arguments similar to those Coinbase used against the SEC.
Tether faces tough regulations, especially in the EU, with new rules like MiCA impacting its operations. There have been calls for legal action against Tether by U.S. authorities from within the cryptocurrency industry. Tether completed the SOC2 audit on Apr. 1, demonstrating its commitment to regulatory compliance and security measures.
As Tether focuses on regulatory compliance and security, its ability to navigate tough regulations and maintain security standards will be crucial moving forward.
