Rep. Maxine Waters (D-CA), the top Democrat on the U.S. House Financial Services Committee, was among lawmakers who blasted the Securities and Exchange Commission on Thursday over its handling of enforcement actions against crypto firms.
The letter, which was also written by Reps. Brad Sherman (D-CA) and Sean Casten (D-IL), accused the regulator of selectively enforcing securities laws against crypto firms, while alleging that Tron founder Justin Sun has connections with China, putting U.S. security at risk.
“The SEC’s whiplash policy reversal from vigorous enforcement against unscrupulous crypto players to possible abandonment of a strong case creates the appearance that political considerations, not legal merits, potentially drove this decision,” the lawmakers wrote in the letter addressed to SEC Commissioner Paul Atkins regarding Sun’s case.
A spokesperson for the SEC declined to comment to Decrypt.
The letter came as the passage of a crypto market structure bill appeared increasingly unlikely, following Coinbase’s decision to pull support for the legislation.
The bill seeks to clarify jurisdictional boundaries between the SEC and the Commodity Futures Trading Commission, with the CFTC to assume oversight of spot crypto trading if it passes.
That development followed weeks of intensive lobbying on issues including decentralized finance (DeFi) and stablecoin rewards.
Under Paul Atkins, the SEC has dumped enforcement actions against numerous crypto firms, most of which were brought under former Chair Gary Gensler. In the letter, lawmakers specifically called out the agency’s retreat from cases involving Binance, Coinbase, and Kraken.
They underscored that crypto firms spent tens of millions of dollars to help U.S. President Donald Trump win re-election in 2024, before he tapped Atkins to reshape Gensler’s work. On the campaign trail, Trump accused the figurehead of leading an “anti-crypto crusade.”
Chasing the Sun
Although the letter was reminiscent of partisan conflicts over crypto in prior years, the lawmakers detailed “an opportunity to demonstrate to Americans that the SEC still has their back”: leaning back into its case against Sun, one of Trump’s biggest crypto boosters.
The SEC sued Sun in March 2023, claiming that his companies conducted over 600,000 wash trades to artificially inflate the TRX token’s volume, along with fraud and unregistered securities violations. The SEC asked a judge to pause the case in February to explore a resolution.
“The SEC’s request to stay the Sun litigation, and subsequent efforts to settle the matter, may have been unduly influenced by Sun’s relationship with the Trump family, including his significant financial contributions to their businesses,” they wrote.
Decrypt has reached out to Tron for comment.
Sun, who was recognized as a top holder of the president’s meme coin with a gold watch at a controversial private dinner last year, has also invested $75 million in World Liberty Financial, a DeFi project backed by members of the Trump family.
Sun said on X, in a since-deleted post, that he would buy $10 million worth of tokens offered by World Liberty in September, which lawmakers called “an apparent effort to persuade [the team] that he is committed to the project,” and that they should unlock his frozen tokens.
While the lawmakers devoted paragraphs to those companies, they also devoted several pages to the Chinese-born billionaire. The section reiterated allegations the SEC brought against Sun, including a celebrity endorsement scheme.
“In late 2024 and throughout 2025, including during pending settlement discussions with the SEC, Sun has gone above and beyond to funnel money to the Trump family crypto businesses,” the lawmakers wrote. “These circumstances create a clear appearance of regulatory capture and political interference that strikes at the heart of the SEC’s independence.”
The lawmakers added that their concerns are “compounded by outstanding questions regarding ties between the Tron Foundation, Sun, and the People’s Republic of China (PRC), which suggest that Sun may be a security risk” to the U.S.
Although Sun is a representative of Grenada, lawmakers cited news reports and court records indicating he resides in China and maintains links to PRC Party institutions. That included an announcement in 2021 from Sun that he would work with China’s Central Party School on a project linked to the country’s central bank and an internet censor.
The lawmakers cited a news report from The Verge, in which Sun suggested he had obligations to powerful government officials. They also referenced a pseudonymous investigator on X named “BoringSlueth,” who claims Tron’s 2017 initial coin offering drew deep participation from wallets connected to a CCP-linked “crypto crime cartel.”
“The Commission must demonstrate that its enforcement and supervisory decisions have been—and will remain—free from foreign pressure or interference,” the lawmakers added. “The involvement of a PRC national who the SEC believes may reside in Hong Kong raises a set of questions regarding the susceptibility of the SEC to potential foreign influence.”
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