U.S. House Democrats are raising eyebrows at the SEC's sudden about-face on crypto enforcement, pointing to the stalled case against Tron founder Justin Sun as a textbook example of potential favoritism.
In a letter to SEC Chairman Paul Atkins, three Democratic lawmakers demanded explanations for why over a dozen crypto enforcement actions have been axed or frozen since President Trump's inauguration. They specifically highlighted the Justin Sun case, which has been lingering in limbo for nearly a year.
The lawmakers expressed concern that the SEC is dismissing cases despite judicial approval of fraud accusations, instead leaning on 'regulatory discretion' like a degen leaning on leverage. They pointed to substantial political contributions from crypto companies like Coinbase and Ripple to the Trump campaign and inauguration as raising serious questions about impartiality.
Sun's case has drawn particular scrutiny because he has invested heavily in Trump-associated crypto initiatives, including World Liberty Financial. Democrats also cited security concerns due to Sun's involvement with China's Central Party School, noting the geopolitical tightrope walk.
Congresswoman Waters warned that the abrupt change in the SEC's crypto enforcement approach could lead the public to believe decisions aren't based on facts or investor protection, but rather on who’s got the deepest pockets for campaign coffers.
The legislators have formally requested preservation of all communications regarding the Sun case cessation, including any external influence on the decision, effectively asking for receipts on this regulatory flip-flop.
