A group of Democratic lawmakers is accusing the Securities and Exchange Commission of backing away from its role as a watchdog over the cryptocurrency industry, warning that the agency’s recent actions could undermine investor protection and market integrity.
In a letter sent to SEC Chairman Paul Atkins, Reps. Maxine Waters, Sean Casten, and Brad Sherman criticized the Commission for dropping or closing at least a dozen crypto-related enforcement cases since early 2025. The lawmakers argue the shift represents a sharp reversal from the SEC’s earlier, more aggressive approach to policing alleged fraud and unregistered securities offerings in the digital asset sector.
According to the letter, several high-profile cases against major cryptocurrency firms — including Binance, Coinbase, and Kraken — were abandoned after the 2024 presidential election, despite courts allowing the SEC’s claims to proceed. In some instances, the agency had already defeated motions to dismiss, yet still opted to end the litigation, citing regulatory discretion rather than weaknesses in the cases themselves.
Democrats say the timing of these decisions raises concerns about political influence. They point out that multiple crypto companies affected by the enforcement pullback donated millions of dollars to former President Donald Trump’s campaign or inauguration efforts.
Justin Sun singled out
The lawmakers also highlighted the case of Justin Sun, founder of the Tron Foundation. Enforcement proceedings against Sun remain paused, even as he has reportedly invested significant sums in crypto ventures linked to Trump. The letter raises additional concerns about Sun’s ties to China, arguing that such connections could pose risks to U.S. markets and national financial security.
The lawmakers urged the SEC to lift the stay on Sun’s case or pursue a settlement that reflects what they describe as the strength of the agency’s original claims. They also demanded records and internal communications explaining why cases were dropped and whether political or foreign considerations played any role in enforcement decisions.
“The SEC’s whiplash policy reversal — from vigorous enforcement against unscrupulous crypto players to the possible abandonment of strong cases — creates the appearance that political considerations, not legal merits, may be driving these decisions,” Waters wrote. “The American public deserves to know whether the SEC’s independence has been compromised and whether justice in our markets has been subordinated to political interests.”
Waters, the top Democrat on the House Financial Services Committee, noted that oversight of the SEC could intensify if Democrats regain control of the House in the 2026 elections, setting the stage for further scrutiny of the agency’s handling of crypto regulation.
The dispute reflects growing tension in Washington over how aggressively federal regulators should police the fast-evolving and increasingly politicized digital asset industry.