House Democrats warned that the unresolved SEC case against the Tron founder could potentially erode investors’ trust in the financial regulator.
Three House Democrats are asking Paul Atkins, the chair of the US Securities and Exchange Commission (SEC), for information about the agency’s decision to close investigations or dropping enforcement actions in “at least a dozen crypto-related cases,” such as those involving Justin Sun, the founder of Tron.
Lawmakers raise concerns over halted enforcement actions
In a letter to Atkins on Thursday, Representatives Maxine Waters, Brad Sherman, and Sean Casten asked about the SEC’s “priorities and effectiveness” after it dropped the crypto-related prosecutions. The MPs said that the government had “openly and boldly dismissed the majority of its crypto enforcement cases,” which included cases against Binance, Coinbase, and Kraken, three prominent cryptocurrency exchanges.
Most of the letter, meanwhile, asked the SEC to think about reviving its case against Sun. In February, the agency’s lawyers urged a federal court to put the Tron founder’s enforcement action on hold so they could look into a possible remedy.
Waters, Sherman, and Casten asked about Sun’s ties to China and said that the case being dropped “may be part of a pay-to-play scheme,” since the Tron founder bought millions of dollars’ worth of tokens from World Liberty Financial, a crypto company that US President Donald Trump and his sons support.
The letter noted, The SEC’s decision to seek a stay of its strong case against Sun […] threatens to undermine investors’ confidence in the SEC. It also said, Without a strong, independent SEC, capital formation will undoubtedly suffer, as would our real economy. The SEC’s proposal to put the Sun case on hold for 11 months sends a message to the market that securities regulations are not always followed and that people with enough political power can avoid punishment.
Source: House Financial Services Committee Democrats
Calls for transparency and record preservation
The three congressmen asked the SEC to keep and make available all records and correspondence related to its ruling in the Sun case. Cointelegraph asked the SEC and a Sun spokesman for their thoughts, but they had not heard back by the time this article was published.
In December, Waters asked Representative French Hill, who is in charge of the House Financial Services Committee, to conduct a hearing to look into what she called the SEC’s “rapid, significant, and questionable policy shifts during the Trump Administration.” She said that the government had stopped and started enforcement operations against crypto firms.
In a letter to Atkins in September, Casten and Senator Jeff Merkley also asked why the SEC dropped the Sun case.
Regulatory leadership gaps deepen scrutiny
Caroline Crenshaw was the last Democratic commissioner at the SEC when she left earlier this month. After she resigned, the agency only had three Republican commissioners: Mark Uyeda, Hester Pierce, and Atkins.
Trump had not named any possible candidates for the two empty commissioner positions or said that he will keep the bipartisan balance by nominating Democrats as of Thursday.
The Commodity Futures Trading Commission (CFTC) is in the same boat, with only one commissioner, Michael Selig, who was chosen by Trump and is a Republican. The CFTC typically has five commissioners confirmed by the Senate.