The top Democrat on the U.S. House Financial Services Committee demanded the chairman of the Securities and Exchange Commission explain during a hearing Wednesday what happened to the agency’s interest in Tron Foundation founder Justin Sun and whether his ties to President Donald Trump have been influential.
Rep. Maxine Waters highlighted U.S. securities regulators’ abandonment of nearly all of their previous cryptocurrency enforcement cases when Trump took the White House and replaced the agency’s leadership last year. He highlighted the case against Sun in which the agency investigated Sun and his company for wide-ranging allegations, including that they had improperly increased the price of its token (TRX).
SEC Chairman Paul Atkins told the committee he could not discuss individual cases but expressed a willingness to have further conversations in a confidential briefing “to the extent the rules allow me to.”
Sun was indicted by the SEC in 2023 for attempting to artificially inflate TRX trading volume through a so-called “wash trading” scheme, allegedly having his own employees “engage in more than 600,000 TRX wash trades between two cryptoasset trading platform accounts that he controlled.” But the agency decided to stay that case in court a year ago “while they consider a possible resolution.” No resolution has yet been announced.
“Well, while you’ve been exploring a possible resolution, Mr. Sun has been busy ingratiating himself within Trump’s orbit,” Waters told Atkins, referring to Sun’s ties to the Trump family’s World Liberty Financial Inc..
Waters also pointed to a more 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,” he said. “Does your statement extend to fraud in the cryptocurrency market?”
“Whatever has to do with values,” Atkins responded.
Last year, his agency dropped high-profile enforcement matters against Binance, Ripple, Coinbase, Kraken, Robinhood and several other companies, and its new leadership criticized the “regulation by enforcement” approach to cryptocurrencies under the agency’s previous leadership.
When asked by another Democratic lawmaker whether his agency ever protects investors at the expense of Trump companies, Atkins responded: “As for 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 cryptocurrency enforcement work, Republicans on the committee focused on Atkins’ promises that he will provide cryptocurrency industry regulations to clarify, along with the Commodity Futures Trading Commission, how companies can operate in the US.
Atkins said the agencies are working on rules “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 it will basically help provide certainty about where the jurisdiction of the two agencies is.”
While the SEC and CFTC work on that joint effort under their Project Crypto label, the CFTC also recently embraced the new approach to US stablecoins by revising an earlier so-called “no action” letter that now clarifies that national fiat banks can issue payment stablecoins, expanding the list of eligible tokenized collateral to include tokens issued by such banks.
Also on Wednesday, the US credit union regulator, the National Credit Union Administration, proposed a rule governing how companies can apply to become stablecoin issuers. It is a first step toward implementing last year’s National Innovation Guidance and Establishment for US Stablecoins (GENIUS) Act, the cryptocurrency 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 hampering Senate progress, Atkins’ agency may take the lead in setting rules for digital assets.
Read more: House Democrats criticize SEC for dropping cryptocurrency cases with ties to Trump
