The SEC was accused by House Democrats of selectively enforcing regulations against cryptocurrency enterprises, while attention was simultaneously directed toward Tron creator Justin Sun.
The Securities and Exchange Commission was blasted on Thursday by Rep. Maxine Waters (D-CA), the leading Democrat on the U.S. House Financial Services Committee, and other legislators regarding its management of enforcement proceedings against cryptocurrency firms.
The regulator was accused of selectively applying securities mandates against digital asset enterprises in the correspondence, which was also authored by Representatives Brad Sherman (D-CA) and Sean Casten (D-IL), while it was further alleged that national security is jeopardized by Tron creator Justin Sun’s purported ties to China.
“The SEC’s whiplash policy reversal from vigorous enforcement against unscrupulous crypto players to possible abandonment of a strong case creates the appearance that political considerations, not legal merits, potentially drove this decision,”
the lawmakers wrote in the letter addressed to SEC Commissioner Paul Atkins regarding Sun’s case.
The correspondence was dispatched as the approval of a crypto market structure mandate appeared progressively improbable, following the decision by Coinbase to withdraw its backing for the bill.
Jurisdictional boundaries between the SEC and the Commodity Futures Trading Commission are sought to be clarified by the bill, with oversight of spot crypto trading to be assumed by the CFTC should the legislation be passed.
That progression was preceded by weeks of concentrated advocacy regarding matters such as decentralized finance (DeFi) and stablecoin incentives.
Enforcement proceedings against various cryptocurrency enterprises were discarded under the leadership of Paul Atkins, the majority of which had been initiated by former Chair Gary Gensler. The agency’s withdrawal from litigation involving Binance, Coinbase, and Kraken was specifically highlighted by legislators within the correspondence.
It was underscored by the lawmakers that tens of millions of dollars were spent by crypto firms to assist U.S. President Donald Trump in winning his 2024 re-election, prior to Atkins being tapped by him to overhaul Gensler’s initiatives. During the campaign, the figurehead was accused by Trump of spearheading an “anti-crypto crusade.”
Following the Sun
While the correspondence was evocative of past partisan disputes regarding digital assets, “an opportunity to demonstrate to Americans that the SEC still has their back” was detailed by the legislators: pivoting back toward the litigation against Sun, who is recognized as one of Trump’s most prominent crypto advocates.
Sun was sued by the SEC in March 2023, with claims being made that over 600,000 wash trades were conducted by his companies to artificially inflate TRX token volume, alongside fraud and unregistered securities violations. A judge was asked by the SEC to pause the litigation in February so that a resolution could be explored.
“The SEC’s request to stay the Sun litigation, and subsequent efforts to settle the matter, may have been unduly influenced by Sun’s relationship with the Trump family, including his significant financial contributions to their businesses,”
they wrote.
Sun, who was presented with a gold watch at a contentious private banquet last year as a premier holder of the president’s meme coin, has also seen $75 million invested by his hand into World Liberty Financial, a DeFi venture supported by Trump family members.
It was stated by Sun on X, via a now-removed post, that $10 million worth of tokens offered by World Liberty would be purchased by him in September, which was characterized by lawmakers as “an apparent effort to persuade [the team] that he is committed to the project,” and that his frozen tokens should be unlocked.
Lawmakers Reiterate SEC Allegations Against Justin Sun
While paragraphs were devoted to those enterprises by the legislators, several pages were also dedicated to the Chinese-born billionaire. Allegations brought by the SEC against Sun, including a celebrity endorsement scheme, were reiterated within the section.
“During late 2024 and throughout 2025, even while settlement negotiations were being held with the SEC, efforts were made by Sun to funnel funds toward Trump family crypto ventures,” the legislators stated. “A clear appearance of regulatory capture and political meddling is created by these circumstances, which is felt at the very core of the SEC’s independence.”
It was added by the legislators that their anxieties are “compounded by outstanding questions regarding ties between the Tron Foundation, Sun, and the People’s Republic of China (PRC), which suggest that Sun may be a security risk” to the U.S.
While Sun is recognized as a representative of Grenada, news reports and court records were cited by lawmakers indicating his residence in China and his continued links to PRC Party institutions. Included in that evidence was a 2021 announcement by Sun that collaboration would be undertaken with China’s Central Party School on a venture connected to the nation’s central bank and an internet censor.
A news report from The Verge was cited by the legislators, in which it was suggested by Sun that obligations were held by him toward influential government officials. Reference was also made to a pseudonymous investigator on X known as “BoringSlueth,” by whom it is claimed that deep participation was drawn from wallets linked to a CCP-connected “crypto crime cartel” during Tron’s 2017 initial coin offering.
“The Commission must demonstrate that its enforcement and supervisory decisions have been—and will remain—free from foreign pressure or interference,” the lawmakers added. “The involvement of a PRC national who the SEC believes may reside in Hong Kong raises a set of questions regarding the susceptibility of the SEC to potential foreign influence.”
