The top Democrat on the U.S. House of Representatives Financial Services Committee asked the chairman of the Securities and Exchange Commission to explain at a hearing Wednesday what happened with the agency’s interest in Tron Foundation founder Justin Sun and whether his ties to President Donald Trump had any influence.
Rep. Maxine Waters pointed to U.S. securities regulators’ abandonment of nearly all of their 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 in which the agency investigated Sun and his company over numerous allegations, including that they inappropriately raised the price of their token (TRX).
SEC Chairman Paul Atkins told the committee he couldn’t discuss individual cases, but he expressed a willingness to have further conversations in a confidential briefing “to the extent that the rules allow me to do so.”
Sun was formally charged by the SEC in 2023 with attempting to artificially inflate TRX trading volume through a so-called “wash trading” scheme, which allegedly caused his own employees to “engage in more than 600,000 TRX wash trades between two crypto asset trading platform accounts he controlled.” But the agency decided to put that case on hold in court a year ago “while it considers a potential resolution.” No resolution has yet been announced.
“Well, while you were looking at a potential solution, Mr. Sun was 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 also pointed to a more recent development in which an alleged former 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 stated that under your leadership the SEC will focus on actual fraud,” she said. “Does your statement extend to fraud in the crypto market?
“Anything to do with securities,” Atkins replied.
His agency dropped high-profile enforcement cases against Binance, Ripple, Coinbase, Kraken, Robinhood and several other companies last year, with its new leadership criticizing the “regulation by enforcement” approach to crypto under the agency’s previous leadership.
Asked by another Democratic lawmaker whether his agency was protecting investors at the expense of Trump’s businesses, Atkins replied: “As far as what the Trump family does or doesn’t do, I can’t speak to that.”
While Democrats focused on the SEC’s reversal of its previous crypto enforcement work, committee Republicans focused on Atkins’ promises that he would provide crypto industry regulations to clarify — alongside the Commodity Futures Trading Commission — how companies can operate in the United States.
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’re going to move that forward, and basically that will help provide certainty about the jurisdiction of both agencies.”
While the SEC and CFTC are working on this joint effort under their Project Crypto label, the CFTC also recently decided to adopt the new US approach to stablecoin by revising a previous so-called “no action” letter which now clarifies that domestic trusted banks can issue payment stablecoins, thereby expanding the list of eligible token collateral to include tokens issued by these 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. This is a first step toward implementing last year’s Guiding and Establishing National Innovation for American Stablecoins (GENIUS) Act – the crypto industry’s first major legislative victory.
Meanwhile, the crypto industry is now watching a political race between Atkins SEC and Senate lawmakers working on the Clarity Act to regulate US crypto markets. As recent setbacks stall progress in the Senate, the Atkins Agency could take the lead in establishing rules on digital assets.
Read more: House Democrats slam SEC for dropping crypto cases linked to Trump ties
