Three Democratic members of the U.S. House of Representatives—Maxine Waters, Brad Sherman, and Sean Casten—have sent a formal letter to Securities and Exchange Commission (SEC) Chair Paul Atkins demanding information and action regarding the agency's closure of numerous cryptocurrency enforcement cases. The lawmakers allege the SEC has dismissed or stayed investigations in "at least one dozen crypto-related cases," including actions against major exchanges Binance, Coinbase, and Kraken, and have raised serious concerns about political influence.
The core of the letter focuses on urging the SEC to reconsider its decision to stay the enforcement action against Tron founder Justin Sun. In February, SEC lawyers requested a federal court to stay the case to explore a potential resolution. The lawmakers question Sun's connections to China and suggest the case being dropped "may be part of a pay-to-play scheme." They point to Sun's purchase of millions of dollars worth of tokens from World Liberty Financial, a crypto company backed by former President Donald Trump and his sons.
The letter states, "The SEC’s decision to seek a stay of its strong case against Sun […] threatens to undermine investors’ confidence in the SEC," adding that it "signals to the market that securities laws are enforced selectively, and that those with sufficient political influence can evade accountability." The lawmakers have asked the SEC to preserve and produce all documents related to its decision in the Sun case.
This action follows previous concerns raised by the legislators. In December, Waters called for a hearing to examine the SEC's "rapid, significant, and questionable policy shifts during the Trump Administration." Casten also joined Senator Jeff Merkley in a September letter questioning the dropping of the Sun case. The political context is underscored by the current composition of the SEC, which, following the departure of Democrat Caroline Crenshaw, is now led solely by three Republican commissioners: Paul Atkins, Hester Peirce, and Mark Uyeda.
The allegations tie the timing of case closures to a surge in cryptocurrency industry political donations during the 2024 election cycle, primarily to committees supporting Trump. Experts cited note the unusual pattern of dismissing cases where the SEC reportedly possessed strong evidence, a departure from standard enforcement protocols. The lawmakers warn that such actions could erode regulatory consistency, increase market volatility, and damage investor confidence.
