SEC Chair Paul Atkins Faces Scrutiny Over Dropped Crypto Cases

TLDR

• SEC Chair Paul Atkins faced tough questions from lawmakers about the agency’s recent decline in crypto enforcement actions.
• Democrats raised concerns over the SEC’s decision to pause the case against Tron founder Justin Sun and drop the lawsuit against Binance.
• Lawmakers questioned the potential influence of former President Donald Trump’s ties to the cryptocurrency industry on the SEC’s decisions.
• SEC enforcement actions dropped by 30% in 2025, with a 60% decrease in crypto-related cases compared to the previous year.
• Rep. Stephen Lynch criticized the SEC for reputational damage and asked for an explanation on the dropped cases.

At a House Financial Services Committee hearing, lawmakers raised concerns about the SEC’s shifting approach to cryptocurrency regulations. Chair Paul Atkins faced tough questions about the agency’s recent decline in enforcement actions, particularly regarding crypto giants like Binance and Tron founder Justin Sun. Democrats questioned whether connections to former President Donald Trump played a role in these decisions.

SEC Drops Cases Against Major Crypto Players

During the hearing, SEC Chair Paul Atkins addressed the agency’s decision to pause its case against Justin Sun, founder of Tron. In 2023, the SEC charged Sun with orchestrating unregistered crypto securities sales and manipulating trade volumes. However, by February 2025, the agency requested a stay in the case, prompting concerns about political influence after Sun became a prominent investor in Trump-linked crypto ventures.

Furthermore, the SEC dropped its lawsuit against Binance in May 2025, which had accused the crypto exchange of offering unlicensed services and misrepresenting its trading controls. Binance and Changpeng Zhao, had pled guilty to Bank Secrecy Act violations in 2023, agreeing to pay over $4 billion to settle a Justice Department investigation. President Trump later pardoned Zhao, further complicating the situation.

Democrats Question SEC’s Enforcement Efforts Under Atkins

Democratic lawmakers expressed concern over the sharp decline in crypto-related enforcement cases. A report by Cornerstone Research indicated that SEC enforcement actions fell by 30% in 2025 compared to the previous year. The decline in crypto-related cases stood out, with a 60% decrease in such actions, pointing to a possible shift in the agency’s enforcement priorities.

Rep. Stephen Lynch of Massachusetts criticized the SEC’s handling of cases, questioning how these developments occurred without any enforcement actions. “The reputational damage that the SEC is suffering right now is unbelievable,” Lynch said. Despite these concerns, Atkins defended the agency, claiming the SEC’s efforts remained robust and active in bringing new cases.

Trump’s Crypto Ventures and Alleged Conflicts

Lawmakers continued to press Atkins about former President Donald Trump’s involvement in the cryptocurrency industry. Trump’s ventures, such as World Liberty Financial, have raised concerns about potential conflicts of interest. Estimates suggest Trump has earned over $1.4 billion from his crypto-related projects, with his family holding a 20% stake in American Bitcoin.

Rep. Sean Casten from Illinois asked Atkins if there was any evidence that investors had been hurt as a result of the SEC’s decisions. Rep. Sylvia Garcia also asked if Trump, his family, or his administration had ever influenced Atkins’ enforcement actions. Atkins firmly denied any such influence, saying there had been no requests from Trump or his team regarding SEC actions.

As the SEC continues to adapt its approach to cryptocurrency regulations, the agency is working to modernize its rules. Recently, the SEC and the Commodity Futures Trading Commission (CFTC) have collaborated on updating their regulations, with a focus on crypto products.

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