Democrats Blast SEC Over Crypto Retreat, Justin Sun’s Alleged China Ties

Rep. Maxine Waters (D-CA), the highest Democrat on the U.S. Home Monetary Providers Committee, was amongst lawmakers who blasted the Securities and Change Fee on Thursday over its dealing with of enforcement actions in opposition to crypto companies.

The letter, which was additionally written by Reps. Brad Sherman (D-CA) and Sean Casten (D-IL), accused the regulator of selectively implementing securities legal guidelines in opposition to crypto companies, whereas alleging that Tron founder Justin Solar has connections with China, placing U.S. safety in danger.

“The SEC’s whiplash coverage reversal from vigorous enforcement in opposition to unscrupulous crypto gamers to attainable abandonment of a powerful case creates the looks that political issues, not authorized deserves, doubtlessly drove this determination,” the lawmakers wrote within the letter addressed to SEC Commissioner Paul Atkins concerning Solar’s case.

A spokesperson for the SEC declined to remark to Decrypt.

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The letter got here because the passage of a crypto market construction invoice appeared more and more unlikely, following Coinbase’s determination to pull assist for the laws.

The invoice seeks to make clear jurisdictional boundaries between the SEC and the Commodity Futures Buying and selling Fee, with the CFTC to imagine oversight of spot crypto buying and selling if it passes. 

That growth adopted weeks of intensive lobbying on points together with decentralized finance (DeFi) and stablecoin rewards.

Beneath Paul Atkins, the SEC has dumped enforcement actions in opposition to quite a few crypto companies, most of which have been introduced beneath former Chair Gary Gensler. Within the letter, lawmakers particularly known as out the company’s retreat from circumstances involving Binance, Coinbase, and Kraken. 

They underscored that crypto companies spent tens of hundreds of thousands of {dollars} to assist U.S. President Donald Trump win re-election in 2024, earlier than he tapped Atkins to reshape Gensler’s work. On the marketing campaign path, Trump accused the figurehead of main an “anti-crypto campaign.”

Chasing the Solar

Though the letter was harking back to partisan conflicts over crypto in prior years, the lawmakers detailed “a chance to reveal to Individuals that the SEC nonetheless has their again”: leaning again into its case in opposition to Solar, one in all Trump’s largest crypto boosters.

The SEC sued Solar in March 2023, claiming that his corporations carried out over 600,000 wash trades to artificially inflate the TRX token’s quantity, together with fraud and unregistered securities violations. The SEC requested a choose to pause the case in February to discover a decision.

“The SEC’s request to remain the Solar litigation, and subsequent efforts to settle the matter, might have been unduly influenced by Solar’s relationship with the Trump household, together with his vital monetary contributions to their companies,” they wrote.

Decrypt has reached out to Tron for remark.

Solar, who was acknowledged as a prime holder of the president’s meme coin with a gold watch at a controversial non-public dinner final 12 months, has additionally invested $75 million in World Liberty Monetary, a DeFi mission backed by members of the Trump household.

Solar mentioned on X, in a since-deleted put up, that he would purchase $10 million value of tokens supplied by World Liberty in September, which lawmakers known as “an obvious effort to influence [the team] that he’s dedicated to the mission,” and that they need to unlock his frozen tokens.

Whereas the lawmakers devoted paragraphs to these corporations, additionally they devoted a number of pages to the Chinese language-born billionaire. The part reiterated allegations the SEC introduced in opposition to Solar, together with a celeb endorsement scheme.

“In late 2024 and all through 2025, together with throughout pending settlement discussions with the SEC, Solar has gone above and past to funnel cash to the Trump household crypto companies,” the lawmakers wrote. “These circumstances create a transparent look of regulatory seize and political interference that strikes on the coronary heart of the SEC’s independence.”

The lawmakers added that their issues are “compounded by excellent questions concerning ties between the Tron Basis, Solar, and the Individuals’s Republic of China (PRC), which counsel that Solar could also be a safety danger” to the U.S.

Though Solar is a consultant of Grenada, lawmakers cited information stories and courtroom data indicating he resides in China and maintains hyperlinks to PRC Occasion establishments. That included an announcement in 2021 from Solar that he would work with China’s Central Occasion Faculty on a mission linked to the nation’s central financial institution and an web censor.

The lawmakers cited a information report from The Verge, by which Solar recommended he had obligations to highly effective authorities officers. In addition they referenced a pseudonymous investigator on X named “BoringSlueth,” who claims Tron’s 2017 preliminary coin providing drew deep participation from wallets related to a CCP-linked “crypto crime cartel.”

“The Fee should reveal that its enforcement and supervisory selections have been—and can stay—free from overseas stress or interference,” the lawmakers added. “The involvement of a PRC nationwide who the SEC believes might reside in Hong Kong raises a set of questions concerning the susceptibility of the SEC to potential overseas affect.”