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- Lawmakers question SEC motives as crypto cases vanish amid rising political donations
- Justin Sun case pause fuels claims of selective enforcement and political favoritism
- Trump-linked crypto funding intensifies scrutiny of SEC regulatory independence
Pressure intensified in Washington as House Democrats accused the Securities and Exchange Commission of stepping back from crypto enforcement. The lawmakers believe that the withdrawal has been parallel to the increase in political donations linked to President Donald Trump.
The agency has also been questioned on the direction of its regulation rather than protecting the interests of investors. In a letter to SEC Chairman Paul Atkins, the pullback risks undermining confidence in the U.S. financial regulation, according to a formal letter.
It is significant to note that the letter was spearheaded by the Representatives of Maxine Waters, Sean Casten, and Brad Sherman. Based on their allegations, the SEC has swept aside over a dozen enforcement actions regarding crypto since the beginning of 2025.
Moreover, the cases that were lost touched on big players in the industry. It was stated in the letter that the actions against Binance, Coinbase, and Kraken were discontinued. In turn, the shift was the subject of warnings by Democrats that it compromises the mission of the SEC.
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Political Donations Raise Pay-to-Play Concerns
The lawmakers believe that a steep rise in crypto-related political expenditures accompanied enforcement rollbacks. They claimed that at least 85 million dollars of digital assets companies made donations to the reelection campaign of Trump.
Furthermore, those companies whose cases were dismissed allegedly gave at least $1 million to the Trump inauguration. Such companies were Ripple, Robinhood, and Crypto.com.
Therefore, legislators claimed that the overlap gives an impression of preferential treatment. Such trends, as suggested in the letter, pose a risk to fair market implementation and the credibility of regulation.
Justin Sun Case Becomes Flashpoint in Political Influence Debate
The attention then turned to the paused action by the SEC on the action against Justin Sun, who is the founder of Tron. This is the most appropriate case according to legislators, as it has raised issues regarding selective enforcement.
In 2023, Sun was also sued on claims of unregistered securities offerings, market manipulation, and illegal promotion. In February 2025, however, the SEC petitioned to stay and explore a possible settlement.
The pause, as noted in the letter, has now stretched to 11 months. Therefore, democrats cautioned that the extended delays send negative messages to the market.
National Security Issues Add Pressure on Regulators
In addition to the issue of campaign finance, lawmakers were concerned with national security issues relating to Sun. Based on their allegations, Sun is tied to Chinese organizations, such as research projects and media outlets owned by the state.
Moreover, the legislators pointed to the investment of more than $75 million in Trump-related crypto projects reported by Sun. These investments were reported to have involved World Liberty Financial.
Democrats also made a document preservation request with the letter. That is a request that covers any documents related to the stay of the Sun litigation. It also addresses the communications with third parties that seek to affect the case.
As a result of this, the SEC is currently experiencing increasing pressure for transparency. The politicians say that the only way to regain trust is through regular enforcement without political interference.
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