SEC Chair Defends Crypto Enforcement Shift Amid Lawmaker Scrutiny

The hearing’s focal point was the SEC’s decision in February 2025 to seek a stay, effectively pausing, its lawsuit against Justin Sun. The 2023 case accused the Tron founder of orchestrating the unregistered sale of crypto securities tied to TRX and BTT tokens and manipulating their trading volumes. Representative Maxine Waters framed this pause as part of a ‘sweeping rollback’ of crypto enforcement following the change in presidential administration and SEC leadership. The scrutiny intensified due to Sun’s subsequent financial activities: he became the largest backer of World Liberty Financial (WLF), purchasing billions of its WLFI tokens, a venture linked to Trump. Waters also highlighted a recent public claim by Sun’s alleged former girlfriend, who suggested she possessed evidence of TRX manipulation.

When pressed on these developments, Chair Atkins declined to comment on the specifics of the Sun case or any individual enforcement matter, citing agency rules. His offer for a confidential discussion did little to assuage concerns. In a pointed exchange, when asked if the SEC ever acts in ways that could negatively affect Trump-affiliated businesses, Atkins responded, ‘As far as what the Trump family does or not, I can’t speak to that.’ This non-answer fueled lawmakers’ suspicions about the independence of enforcement decisions under the new regime.

The questions extended beyond the Tron case to a pattern of abandoned litigation against major crypto firms. Lawmakers cited the SEC’s termination of lawsuits in 2025 against industry giants including Binance, Ripple, Coinbase, Kraken, and Robinhood. The Binance case, in particular, drew attention. The SEC had sued the exchange in 2023 for offering unlicensed services and misrepresenting trading controls, only to drop the suit in May 2025. Subsequent events raised further eyebrows: former President Trump later pardoned Binance founder Changpeng Zhao, and a WLF-issued stablecoin was used for a massive $2 billion investment in Binance by an Abu Dhabi firm.

Representative Stephen Lynch captured the frustration of the committee, demanding an explanation for how such developments occur ‘without any enforcement action.’ He bluntly told Atkins, ‘The reputational damage that the SEC is suffering right now is unbelievable. And you’re in the seat, sir. It’s your responsibility.’ This line of questioning underscored a central theme: whether the SEC’s strategic retreat from litigation was a principled regulatory shift or one influenced by political and financial connections to the former president’s circle.

In his defense, Chair Atkins asserted that the SEC maintains a ‘robust enforcement effort’ and continues to bring cases. However, this claim was directly challenged by data presented during the hearing. A report from Cornerstone Research showed that the SEC’s overall legal actions fell by 30% in 2025, with crypto-related cases plummeting by 60%. This dramatic decline coincides with Atkins’ tenure, which began in April 2025 following the departure of former Chair Gary Gensler.

Atkins, known for criticizing his predecessor’s ‘aggressive’ and ‘litigation-heavy’ approach, has framed his leadership as a move toward a different regulatory philosophy. The hearing revealed the political and practical consequences of this shift. While Atkins positioned the change as a strategic recalibration, Democratic lawmakers interpreted the data as evidence of an enforcement vacuum, potentially exposing investors to greater risk and undermining the SEC’s mandate. The stark statistics provided a quantitative backbone to the qualitative concerns about specific cases, painting a picture of an agency in the midst of a profound and controversial transformation.