Congressional Scrutiny of SEC Enforcement Priorities
Three Democrats in the House of Representatives have formally requested information from US Securities and Exchange Commission (SEC) Chair Paul Atkins regarding the agency's decision to close investigations or dismiss enforcement actions in at least a dozen crypto-related cases. This inquiry specifically includes cases involving Tron founder Justin Sun.
In a letter addressed to Chair Atkins on Thursday, Representatives Maxine Waters, Brad Sherman, and Sean Casten expressed concerns about the SEC’s "priorities and effectiveness" in light of these dismissals. The lawmakers stated that the agency had "openly and boldly dismissed the majority of its crypto enforcement cases," citing examples such as those against crypto exchanges Binance, Coinbase, and Kraken.
A significant portion of the letter focuses on urging the SEC to reconsider its case against Justin Sun. In February, the agency's lawyers had requested a federal court to stay its enforcement action against the Tron founder to explore a potential resolution.
Representatives Waters, Sherman, and Casten raised questions concerning Sun's ties to China, suggesting that the dismissal of his case "may be part of a pay-to-play scheme." This concern is amplified by the Tron founder's alleged purchase of millions of dollars worth of tokens from World Liberty Financial, a crypto company reportedly backed by US President Donald Trump and his sons.
“The SEC’s decision to seek a stay of its strong case against Sun […] threatens to undermine investors’ confidence in the SEC,” the letter stated. It further elaborated: “Without a strong, independent SEC, capital formation will undoubtedly suffer, as would our real economy. The SEC’s request to stay the Sun case, which has now been in place for 11 months, signals to the market that securities laws are enforced selectively, and that those with sufficient political influence can evade accountability.”
The three lawmakers have requested that the SEC preserve and produce all documents and communications pertaining to its decision in the Sun case. Cointelegraph sought comments from the SEC and a spokesperson for Justin Sun but had not received a response by the time of publication.
In December, Representative Waters had previously called on Representative French Hill, who chairs the House Financial Services Committee, to schedule a hearing to examine what she described as the SEC’s “rapid, significant, and questionable policy shifts during the Trump Administration.” She specifically pointed to the agency's termination and staying of enforcement actions against crypto companies as examples.
Representative Casten had also joined Senator Jeff Merkley in questioning the SEC's decision to drop the Sun case. This inquiry was conveyed in a September letter addressed to Chair Atkins.
SEC Leadership Shifts and Bipartisan Balance
The SEC is now operating with entirely Republican leadership following the departure of Caroline Crenshaw, the last remaining Democratic commissioner, earlier this month. Her exit has left the agency with three Republican commissioners: Mark Uyeda, Hester Pierce, and Chair Paul Atkins.
As of Thursday, President Trump had not announced any potential replacements for the two vacant commissioner seats, nor had he indicated any plans to nominate Democrats to maintain a bipartisan balance within the commission.
The Commodity Futures Trading Commission (CFTC) is facing a similar situation regarding its leadership. The sole sitting commissioner is Michael Selig, who was appointed by President Trump and is a Republican. Typically, the CFTC's leadership comprises five Senate-confirmed commissioners.