The top Democrat on the US House Financial Services Committee demanded the chairman of the Securities and Exchange Commission explain during a Wednesday hearing what happened to the agency’s enforcement interests in Tron Foundation founder Justin Sun and whether his ties to President Donald Trump have had an impact.
Representative Maxine Waters highlighted the U.S. securities regulator’s abandonment of nearly all of its previous crypto enforcement cases when Trump took over the White House and replaced the agency’s leadership last year. She highlighted the case against Sun, where the agency investigated Sun and his company over wide-ranging allegations, including that they had improperly inflated the price of their token (TRX).
SEC Chairman Paul Atkins told the committee he could not discuss individual cases, but he expressed his willingness to have further conversations in a confidential briefing “to the extent the rules allow me to do so.”
Sun was formally charged by the SEC in 2023 with attempting to artificially inflate TRX’s trading volume through a so-called “wash trading” scheme, allegedly having his own employees “engage in more than 600,000 wash trades of TRX between two crypto-asset trading platform accounts he controlled.” But the agency moved to put the case on hold in court a year ago “while they consider a potential settlement.” No decision has yet been published.
“Well, while you were exploring a potential solution, Mr. Sun has been busy ingratiating himself into Trump’s orbit,” Waters told Atkins, referring to Sun’s ties to the Trump family’s World Liberty Financial Inc.
Waters has also flagged a recent development in which an alleged ex-girlfriend of Sun publicly suggested she had evidence of TRX manipulation.
Spokespeople for Tron and Sun did not immediately respond to a request for comment on the exchange during Wednesday’s hearing.
“Chairman Atkins, you have said that under your leadership the SEC will focus on real fraud,” she said. “Does your statement extend to crypto market fraud?”
“Anything involving securities,” Atkins replied.
His agency last year dropped high-profile enforcement cases against Binance, Ripple, Coinbase, Kraken, Robinhood and several other companies, with its new leadership criticizing the “regulation-by-enforcement” approach to crypto under the agency’s previous leadership.
Asked by another Democratic lawmaker if his agency ever protects investors at the cost of Trump’s business, Atkins replied, “As to what the Trump family does or doesn’t do, I can’t speak to that.”
While Democrats have focused on the SEC’s rollback of its previous crypto enforcement work, Republicans on the committee focused on Atkins’ promises that he will deliver crypto industry regulations to clarify — along with the Commodity Futures Trading Commission — how the companies can operate in the U.S.
Atkins said the agencies are working on rules “that are consistent with what’s in the Clarity Act that you all passed here in the House, and hopefully what will come out of the joint work that you’re doing with the Senate. So, you know, we’ll take that forward and basically that will help provide certainty as to where the jurisdiction of the two agencies is.”
As the SEC and CFTC work on the joint effort under their Project Crypto label, the CFTC also recently moved to embrace the new US stablecoin approach by revising a previously 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 US regulator of credit unions, the National Credit Union Administration, proposed a rule governing how companies can apply to become stablecoin issuers. It’s an opening step toward implementation of last year’s Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act — the crypto industry’s first major legislative victory.
Meanwhile, the crypto sector is now seeing a political race between Atkins’ SEC and Senate lawmakers working on the Clarity Act to regulate US crypto markets. With recent setbacks dragging on Senate progress, Atkins’ agency may take the lead in establishing rules for digital assets.
Read more: House Democrats slam SEC for dropping crypto cases with Trump ties
