The founder of the TRON blockchain, Justin Sun has been recently served legal notice by the US Security and Exchange Commission for illicit sales of the cryptocurrencies TRX and BitTorrent [BTT], respectively.
In response, Sun called the lawsuit lacking in merit and that the foundation would continue to create the most decentralized financial system possible.
A month back, Sun-backed Huobi exchange, announced an expansion of its operations in Hong Kong and planned to apply for a virtual asset service provider [VASP] license in the Chinese territory.
Since then, the crypto entrepreneur has resorted to praising the nation for its crypto-friendly policy.
The TRON founder continues to strike a confident posture saying that Huobi’s commercial plans in Hong Kong will not be affected by the U.S. civil fraud allegations. As per a Huobi official in a Telegram message, there were “no changes [in plans] for us.”
Despite the fact that Huobi was not mentioned in the SEC lawsuit, a local news outlet, Nikkei Asia, said that the U.S. regulator’s move would make it more challenging for Hong Kong’s Securities Futures Commission [SFC] to approve a VASP application by Huobi.
According to Joshua Chu, a crypto lawyer,” an allegation of past market misconduct may torpedo if not exponentially make it harder for a smooth application process, as envisioned as the [SFC] will be under notice to place extreme scrutiny.”
In addition, legal professionals who counsel crypto companies on license issues indicated that when evaluating VASP applicants, the Hong Kong SFC closely watches any enforcement action taken by regulators in other jurisdictions.
TRON Founder-backed Huobi Exchange Embarks On A Difficult Journey
“In the virtual asset service provider licensing framework, the SFC will also consider the regulatory status of a VASP’s operations and virtual assets listed on its platform in other jurisdictions, not just Hong Kong,” said Kristi Swartz, partner at DLA Piper.
“For example, a VASP must consider whether a virtual asset is subject to any pending regulatory or enforcement actions relating to its issuance before listing it for trading.”
That said, the TRON founder who has a majority stake in Huobi said Hong Kong’s heightened attention is a result of its standing as “one of the experiment zones for crypto development in China.”
Besides the Chinese-controlled territory, Huobi’s other key regions for business are Malaysia and the Caribbean.