Three US House Democrats are accusing the Securities and Exchange Commission of stepping back from its enforcement role in the cryptocurrency sector and are demanding explanations from SEC Chairman Paul Atkins over the agency’s dismissal or pause of several high-profile crypto cases, including one involving Tron founder Justin Sun.
In a letter sent Thursday to Atkins, Representatives Maxine Waters, Sean Casten, and Brad Sherman said they are concerned that the SEC has retreated from its mandate to protect investors at a time when crypto-related risks remain significant.
The lawmakers pointed to the dismissal of more than a dozen crypto enforcement actions since early 2025, naming cases against major industry players such as Binance, Coinbase, and Kraken.
“Given the industry’s history of investor-harm and the clear mandate of the securities laws to protect market participants, this turn raises troubling questions about the SEC’s priorities and effectiveness,” the letter said.
Concerns over dropped crypto enforcement
The lawmakers argued that the SEC’s recent enforcement pullback coincides with a sharp increase in political spending by crypto companies, raising concerns about potential conflicts of interest.
According to the letter, crypto firms donated at least $85 million to President Donald Trump’s reelection campaign.
In addition, the lawmakers said that firms whose enforcement actions were dismissed in 2025 — including Coinbase, Kraken, Ripple, Robinhood, and Crypto.com — each contributed at least $1 million to Trump’s inauguration.
The timing of these donations, they argued, creates what they described as an “unmistakable inference of a pay-to-play scheme.”
The letter calls on Atkins to explain the rationale behind the SEC’s decisions to dismiss or pause enforcement actions and to clarify whether political considerations played any role in those decisions.
The lawmakers emphasized that the SEC’s credibility depends on the consistent application of securities laws, regardless of the political influence or financial resources of market participants.
Focus on the Justin Sun case
A central focus of the lawmakers’ concerns is the SEC’s handling of its case against Justin Sun, the founder of the Tron blockchain.
Sun was sued by the SEC in 2023 for allegedly orchestrating the unregistered offer and sale of crypto securities, manipulating trading volumes, and engaging in unlawful celebrity promotion.
In February 2025, the SEC requested a stay in the case to explore a potential settlement. According to the lawmakers, that stay has now been in place for 11 months.
“The SEC’s request to stay the Sun case, which has now been in place for 11 months, signals to the market that securities laws are enforced selectively, and that those with sufficient political influence can evade accountability,” the lawmakers wrote.
They also noted that Sun invested more than $75 million in Trump-linked crypto ventures, including World Liberty Financial, during late 2024 and early 2025, raising further questions about whether those investments influenced the SEC’s decision-making.
National security and oversight demands
Beyond investor protection, the lawmakers raised national security concerns related to Sun’s alleged ties to China.
The letter cited his involvement in research programs at China’s Central Party School, publications in state media platforms, and his past claims of connections to Chinese officials.
Alongside the letter to Atkins, the lawmakers issued a separate document preservation request.
They asked the SEC to retain all communications related to the decision to pause the Sun litigation, including any contacts with third parties that may have attempted to influence the outcome.
The lawmakers said the requested materials are necessary to ensure transparency and accountability in the SEC’s enforcement decisions as Congress continues its oversight of the agency’s role in regulating the fast-evolving crypto sector.
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