House Democrats Slam SEC Over Trump-Linked Crypto Cases

The House Financial Services Committee hearing became a platform for Democratic lawmakers to confront SEC Chair Paul Atkins over what they characterized as a pattern of leniency toward crypto entities linked to Donald Trump. Representative Stephen Lynch (D-MA) set the tone, stating bluntly that the SEC’s actions were damaging trust. “People are losing trust,” Lynch told Atkins. “This is not good for crypto, it’s certainly not good for consumers. And it’s awful the reputational damage the SEC is suffering right now.” The core allegation was that the regulator’s enforcement decisions appeared influenced by political connections rather than merit, thereby weakening the legitimacy of the digital assets market.

Lawmakers presented a detailed chronology of specific cases. They highlighted the SEC’s dismissal of its lawsuit against the global crypto exchange Binance, which the hearing revealed had “played a major role in facilitating the growth of the Trump family’s crypto company, World Liberty Financial.” This dismissal was followed by President Trump’s pardon of Binance founder Changpeng Zhao, who had pleaded guilty to U.S. money laundering violations. The juxtaposition of these events formed a central pillar of the Democrats’ argument that enforcement was being undermined.

The scrutiny intensified with the case of Justin Sun, founder of the Tron network and a controversial crypto billionaire. Representative Maxine Waters (D-CA) pressed Chair Atkins on the SEC’s decision to indefinitely pause its lawsuit against Sun. That lawsuit had accused Sun not only of offering unregistered securities but also of fraudulently manipulating the price of the TRX token through “extensive wash trading.” The pause came months after Sun purchased $75 million worth of the Trump family’s WLFI token and attended a private dinner with the former president, a privilege gained through his status as a top holder of Trump’s meme coin.

The hearing took a dramatic turn as lawmakers referenced new, uninvestigated allegations against Sun. Waters questioned Atkins about whether the SEC would probe recent claims from a woman identifying as Sun’s ex-girlfriend, who said she provided the agency with substantial evidence of Sun’s direct involvement in insider trading and market manipulation. Sun has denied these allegations. Atkins declined to comment on this or any other specific case, a response that fueled further criticism from committee members about transparency and accountability.

Beyond individual cases, House Democrats framed the SEC’s actions within the context of a severe market downturn. They argued that the erosion of enforcement rigor was a direct contributor to the historic loss of over $1 trillion in crypto market value and a parallel loss of investor faith. The perception of regulatory favoritism, they contended, creates an uneven playing field that deters serious investment and emboldens bad actors.

This sentiment was echoed from within the crypto community itself, including from some of Trump’s traditional allies. The article cited one prominent pro-Trump crypto influencer who lamented, “He literally used his voting base as exit liquidity. This is not the behavior of an actual leader.” This quote underscored a growing concern that personal crypto ventures by political figures, coupled with perceived regulatory indifference, are exploiting retail investors and destabilizing the market. The hearing ultimately painted a picture of a regulatory agency whose credibility is under fire, an industry struggling for legitimacy, and investors caught in the middle of a political and financial storm.