Top Democrats on the U.S. House Financial Services Committee asked the chairman of the U.S. Securities and Exchange Commission to explain at a Wednesday hearing what happened to the agency’s enforcement rights against Tron Foundation founder Justin Sun and whether his relationship with President Donald Trump had an impact.
Representative Maxine Waters emphasized that U.S. securities regulators dropped nearly all previous cryptocurrency enforcement cases last year after Trump entered the White House and changed the agency’s leadership. She highlighted the case against Sun, in which the agency investigated Sun and his company for a wide range of allegations, including that they improperly inflated the price of the token (TRX).
SEC Chairman Paul Atkins told the committee he could not discuss individual cases but said he was open to further conversations in confidential briefings “as long as the rules allow me to do so.”
Sun was formally accused by the SEC in 2023 of trying to artificially inflate TRX’s trading volume through a so-called “wash trading” scheme. He allegedly had his employees “conduct more than 600,000 TRX wash trades between two crypto-asset trading platform accounts he controlled.” But the agency suspended the case in court a year ago “while they consider potential solutions.” No resolution has been announced yet.
“Well, while you’re exploring potential solutions, Mr. Sun has been busy courting the Trump circle,” Waters told Atkins, referring to Mr. Sun’s relationship with the Trump family’s World Liberty Financial Corporation.
Waters also pointed to a recent development in which Sun’s ex-girlfriend allegedly publicly suggested that she had evidence of TRX manipulation.
Spokespersons for Tron and Sun did not immediately respond to requests for comment on the exchanges during Wednesday’s hearing.
“Chairman Atkins, you have said that under your leadership, the SEC will focus on true fraud,” she said. “Do your statements extend to fraud in the crypto market?”
“As long as securities are involved,” Atkins replied.
His agency dropped high-profile enforcement matters against Binance, Ripple, Coinbase, Kraken, Robinhood and several other companies last year, with its new management criticizing the agency’s “enforcement regulatory” approach to cryptocurrencies under its previous leadership.
Asked by another Democratic lawmaker whether his agency had ever protected investors at the expense of Trump businesses, Atkins responded: “As to what the Trump family has done, I can’t comment.”
While Democrats are focused on the SEC reversing its previous cryptocurrency enforcement efforts, Republicans on the committee are focused on Atkins’ promise that he will work with the Commodity Futures Trading Commission to provide cryptocurrency industry regulations to clarify how these companies operate in the United States.
Atkins said the agencies are developing “rules that are consistent with the Clarification Act that you passed in the House and hopefully your work with the Senate will come to fruition. So, you know, we’re going to move forward with that and basically it will help determine where the jurisdiction of both agencies is.”
As the SEC and CFTC work together under its “Crypto Project” label, the CFTC has also recently begun embracing the new U.S. stablecoin approach, amending its previous so-called “no action” letter that now clarifies that national trust banks can issue payment stablecoins, expanding the list of eligible tokenized collateral to include tokens issued by such banks.
Also on Wednesday, the National Credit Union Administration, the U.S. credit union regulator, proposed a rule governing how companies can apply to become stablecoin issuers. This is the first step in implementing last year’s Stablecoin Guidance and Establishing a National Innovation in the United States (GENIUS) Act and the first major legislative victory for the crypto industry.
Meanwhile, the cryptocurrency industry is watching the policy race between Atkins’ SEC and Senate lawmakers working on the Clarification Act to regulate the U.S. cryptocurrency market. With recent setbacks slowing progress in the Senate, Atkins’ agency is likely to take the lead on digital asset rules.
Read more: House Democrats blast SEC for dropping Trump-linked cryptocurrency case
