House Democrats have unleashed a barrage of criticism against the Securities and Exchange Commission (SEC), accusing it of selectively enforcing regulations against cryptocurrency firms. This rebuke coincided with the faltering prospects of a proposed crypto market structure bill aimed at clarifying the jurisdictional lines between the SEC and other regulatory bodies like the Commodity Futures Trading Commission (CFTC).
The letter, signed by prominent figures including Rep. Maxine Waters (D-CA), the leading Democrat on the U.S. House Financial Services Committee, specifically targets Justin Sun, the founder of Tron. Lawmakers allege that Sun has deep ties to China, raising potential national security concerns. In their correspondence addressed to SEC Commissioner Paul Atkins, they highlighted the agency”s inconsistent enforcement strategies, which seem influenced by political factors rather than legal imperatives.
The letter”s timing is noteworthy, as it arrives amid increasing doubts about the passage of the crypto market structure bill. This legislation, which aims to delineate the regulatory authority between the SEC and the CFTC, was jeopardized by Coinbase“s withdrawal of support. The bill seeks to empower the CFTC to oversee spot crypto trading, a significant shift that could reshape the regulatory landscape.
Under Paul Atkins” leadership, the SEC has reversed course on several enforcement actions initially pursued under former Chair Gary Gensler. The lawmakers pointed out that the agency has recently stepped back from cases against major players like Binance, Coinbase, and Kraken. They also noted that substantial financial contributions from crypto firms to U.S. President Donald Trump”s reelection campaign in 2024 might have influenced these decisions.
The Democratic lawmakers expressed that there exists an opportunity for the SEC to reaffirm its commitment to protecting American interests by pursuing legal action against Sun. Earlier this year, the SEC filed a lawsuit against him, accusing his companies of engaging in over 600,000 wash trades to artificially inflate the trading volume of the TRX token, alongside other allegations of fraud and unregistered securities violations. Notably, the SEC has since sought to pause this litigation to explore possible resolutions.
Lawmakers emphasized that the SEC”s decision to stay its case against Sun appeared to be unduly influenced by his connections to the Trump family and his financial contributions to their ventures. In a controversial dinner last year, Sun was recognized as a significant holder of a popular meme coin associated with Trump.
In addition to scrutinizing Sun”s business dealings, the letter elaborated on concerns regarding his affiliations with the People”s Republic of China. Sun, who claims representation from Grenada, has been reported to reside in China and maintain connections with Chinese party institutions. For instance, he announced in 2021 his collaboration with China”s Central Party School on a project related to the country”s central bank.
The lawmakers called for the SEC to ensure that its enforcement and supervisory actions remain free from foreign influence, particularly given Sun”s ties to a nation with complex geopolitical dynamics. They underscored the importance of maintaining the SEC”s independence in its regulatory and enforcement decisions.
