SEC's Crypto Enforcement Retreat Under Fire as Justin Sun Case Stalls

600,000 fake trades. That's what the SEC accused Justin Sun, founder of Tron, of orchestrating to artificially pump his TRX token's price. But since Trump took office, the Securities and Exchange Commission has quietly shelved this case along with nearly every major crypto enforcement action from the previous administration.

Congressional Confrontation

The gloves came off Wednesday during a House Financial Services Committee hearing. Representative Maxine Waters, the panel's top Democrat, grilled SEC Chairman Paul Atkins about the agency's sudden retreat from crypto enforcement—particularly the stalled case against Sun.

"While you were exploring a potential resolution, Mr. Sun has been busy ingratiating himself within Trump's orbit," Waters pointedly told Atkins, referencing Sun's ties to the Trump family's World Liberty Financial.

The timing raises eyebrows. Sun was formally charged in 2023 with wash trading—allegedly using 600,000+ fake transactions between accounts he controlled to inflate TRX's trading volume. But the SEC hit pause a year ago, claiming they were "considering a potential resolution." No resolution has materialized.

Atkins deflected, saying he couldn't discuss individual cases but offered to consider a confidential briefing for lawmakers "to the extent the rules allow."

The Great Crypto Enforcement Rollback

Sun's case isn't isolated. The SEC has dropped or paused high-profile enforcement actions against Binance, Ripple, Coinbase, Kraken, Robinhood, and several other major players. The new leadership has criticized the previous administration's "regulation-by-enforcement" approach, promising a friendlier regulatory environment.

But Democrats aren't buying the pivot. When asked whether his agency would protect investors even if it hurt Trump's businesses, Atkins responded: "As far as what the Trump family does or not, I can't speak to that."

The political undertones are hard to ignore. Sun has cultivated relationships within Trump's circle, and his case's indefinite pause coincides with the broader enforcement pullback.

Racing Toward Clarity (Maybe)

Republicans focused on the promise of clear crypto regulations. Atkins said his agency is working with the Commodity Futures Trading Commission on rules aligned with the House-passed Clarity Act—though the bill's Senate fate remains uncertain.

Meanwhile, crypto-friendly policies are accelerating elsewhere. The CFTC recently clarified that national trust banks can issue stablecoins, while the National Credit Union Administration proposed rules for stablecoin issuers under last year's GENIUS Act—the crypto industry's first major legislative win.

New Allegations Surface

Complicating matters, an alleged former girlfriend of Sun recently claimed publicly to have evidence of TRX manipulation. Waters highlighted this development during the hearing, though Sun's representatives haven't responded to requests for comment.

The allegations add another layer to questions about whether the SEC's enforcement retreat extends too far.