SEC’s Paul Atkins questioned regarding reduction in cryptocurrency enforcement, including matters involving Justin Sun and Tron.

The chairman of the U.S. agency indicated during a House hearing that he is amenable to a confidential briefing for lawmakers regarding the matter.

Justin Sun was a key subject of Representative Maxine Waters’ inquiries directed at the chief of the U.S. SEC during the hearing. (CoinDesk)

Key points:

• U.S. Securities and Exchange Commission Chairman Paul Atkins informed a senior Democratic representative that he is unable to discuss the suspended enforcement case involving Justin Sun and his Tron Foundation, but he acknowledged he would contemplate a confidential briefing for lawmakers.
• While Democrats scrutinized the SEC’s approach to crypto enforcement during an oversight session of the House Financial Services Committee, Republicans centered their attention on Atkins’ plans regarding crypto regulations.
• Atkins stated he is advancing rules that will closely align the agency with the Clarity Act concerning crypto market structure, despite the uncertain fate of that bill in the Senate.

The leading Democrat on the U.S. House Financial Services Committee pressed the SEC chairman during a hearing on Wednesday for explanations regarding the agency’s enforcement interests in Tron Foundation founder Justin Sun and whether his associations with President Donald Trump have influenced the situation.

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Representative Maxine Waters pointed out that the U.S. securities regulators had nearly abandoned all previous crypto enforcement actions following Trump’s administration’s takeover and subsequent leadership changes within the agency last year. She emphasized the ongoing case against Sun, which involved the agency’s investigation into a variety of allegations, including claims that they had improperly inflated the price of their token (TRX).

SEC Chairman Paul Atkins conveyed to the committee that he could not discuss specific cases but expressed a willingness to engage in further discussions during a confidential briefing “to the extent the rules permit.”

Sun was officially charged by the SEC in 2023 for allegedly attempting to manipulate TRX’s trading volume through a method known as “wash trading,” reportedly having his employees “conduct over 600,000 wash trades of TRX between two crypto asset trading platform accounts under his control.” However, the agency opted to pause that case in court a year prior “while they consider a potential resolution.” No resolution has been disclosed thus far.

“While you were exploring a potential resolution, Mr. Sun has been busy building connections within Trump’s circle,” Waters remarked to Atkins, alluding to Sun’s connections with the Trump family’s World Liberty Financial Inc.

Waters also noted a recent incident where an alleged ex-girlfriend of Sun publicly claimed to possess evidence of TRX manipulation.

Representatives for Tron and Sun did not immediately provide a response to a request for comments regarding the discussion during Wednesday’s hearing.

“Chairman Atkins, you have stated that under your leadership, the SEC will concentrate on genuine fraud,” she said. “Does your statement apply to fraud occurring in the crypto market?”

“Any matters involving securities,” Atkins replied.

Last year, his agency dismissed prominent enforcement actions against Binance, Ripple, Coinbase, Kraken, Robinhood, and several other firms, with the new management criticizing the previous leadership’s “regulation-by-enforcement” approach to crypto.

When asked by another Democratic representative whether his agency ever prioritizes investor protection at the expense of Trump’s businesses, Atkins stated, “Regarding what the Trump family does or does not do, I cannot comment.”

While Democrats have concentrated on the SEC’s shift from its earlier crypto enforcement efforts, Republicans on the committee focused on Atkins’ assurances that he will provide the crypto industry with regulations to clarify — alongside the Commodity Futures Trading Commission — how firms can operate within the U.S.

Atkins indicated that the agencies are developing rules “consistent with what is outlined in the Clarity Act that you all passed here in the House, and hopefully what will emerge from the collaborative work you are conducting with the Senate. Thus, we will continue to move forward, which will effectively provide clarity regarding the jurisdictions of both agencies.”

As the SEC and CFTC collaborate on this initiative under their Project Crypto branding, the CFTC has also recently taken steps to adopt the new U.S. stablecoin framework by updating a previous “no action” letter that now clarifies that national trust banks may issue payment stablecoins, broadening the eligibility criteria for tokenized collateral to encompass tokens issued by such banks.

Additionally, on Wednesday, the U.S. regulator for credit unions, the National Credit Union Administration, introduced a rule outlining how firms can apply to become stablecoin issuers. This marks a preliminary step toward the realization of last year’s Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act — the first significant legislative achievement for the crypto sector.

Meanwhile, the crypto industry is currently observing a regulatory competition between Atkins’ SEC and Senate lawmakers working on the Clarity Act to regulate U.S. crypto markets. With recent delays hindering the Senate’s progress, Atkins’ agency may take a leading role in establishing digital asset regulations.

Read More: House Democrats criticize SEC for dropping crypto cases linked to Trump