House Democrats have been concerned about the withdrawal of the U.S. SEC’s involvement with the crypto markets, citing the case of Justin Sun, which is currently stalled at the SEC.
Democrats Question Sudden Change in Crypto Regulatory Policy by SEC
Three members of the U.S. House of Representatives from the Democratic Party have filed a challenge against the leadership of the SEC for what they claim is a “disturbing retreat from some of its oversight duties.”
In a letter sent to SEC Chairman Paul Atkins on Thursday, Representatives demanded to know why over a dozen enforcement actions regarding crypto had been completely axed or frozen, specifically citing the case of Justin Sun.
The lawmakers expressed their concern about the fact that, since the inauguration of President Donald Trump, the SEC has either disbanded or settled numerous high-profile cases involving many of the sector’s biggest players. These include cases initiated against Binance, Coinbase, and Kraken.
Therefore, as asserted by the Democrats, suits have been dismissed despire the grounds that there is judicial approval of fraud accusations when, in fact, the SEC is using “regulatory discretion.”
They also noted the large amount of political contributions coming from the crypto world around the same time. Corporations like Coinbase and Ripple have contributed millions to the Trump campaign and inauguration.
Apparently, in their letter, the Democrats indicated that this kind of convergence generally leads to it being perceived as favoritism, which cannot be avoided. Furthermore, in this regard, it was also indicated that this kind of trend may harm public support in the United States regarding perceiving the SEC as independent.
Why Was Justin Sun Case Paused?
Among all the cases that have been held back, the most prominent case that has garnered attention is the case of Justin Sun. He is the co-founder of the Tron Foundation and is under investigation by the SEC.
Yet, his case has been pending for almost a year now. Since then, Sun, as stated by Democrats, has heavily invested in various crypto initiatives associated with Trump, such as the World Liberty Financial group.
The legislative bodies have also cited their concerns over security relating to the country because of certain linkages that Sun had with the government of China. These include his involvement in programs under the Central Party School of the government of China.
The Democrats believed a stalled case was not the kind of signal they would like to see emanating in the markets. They called on the SEC that the stay should be lifted now or a settlement reached that considered the severity of the original allegations.
Congresswoman Waters went further to explain her concern that the abrupt change in what she perceives as the SEC’s crypto mindset could lead to a perception that neither enforcement actions nor any decision is rendered on the basis of facts or for investor protection purposes.
In addition, the legislators also formally requested a preservation of all communication, internal as well as external, regarding the cessation of the case involving Justin Sun. This also relates to all communication with third parties who might have had some influence over the decision.