A group of Democratic lawmakers is accusing the SEC of a dramatic retreat from enforcing U.S. securities laws against major crypto firms, warning that the timing raises serious questions about political influence.
Since President Trump's inauguration, the SEC has dismissed or closed at least a dozen high-profile crypto cases involving firms like Binance, Coinbase, and Kraken. The Democrats note this happened even after the SEC had successfully defeated motions to dismiss, with the regulator citing regulatory discretion rather than legal merit—essentially pulling a "we could win, but we'd rather not" move that smells fishier than a degen's wallet after a rug pull.
The lawmakers argue the closures coincide with massive crypto donations to Trump's campaign and inauguration from the very companies that saw their cases dropped. They specifically call out Justin Sun, founder of Tron, whose SEC case remains paused while he invests millions in Trump-linked crypto ventures.
Sun's case is a particular sticking point. The SEC sued him in 2023 for alleged wash trading and fraud, then asked a judge to pause the case to explore a settlement. Democrats allege this pause may have been "unduly influenced" by Sun's relationship with the Trump family, including his $75 million investment in World Liberty Financial, a DeFi project backed by Trump's family—because nothing says "regulatory independence" like a seven-figure investment in the First Family's pet project.
Lawmakers also expressed concern about Sun's ties to China, citing reports that he resides there and has connections to CCP institutions. They've demanded the SEC lift the stay on Sun's case or settle it based on the strength of the claims, and are requesting documents about the decision-making process.
Rep. Maxine Waters, the top Democrat on the House Financial Services Committee, stated: "The SEC's whiplash policy reversal creates the appearance that political considerations, not legal merits, potentially drove this decision. The American public deserves to know whether justice in our markets has been subordinated to political interests."
