Democrats press SEC's Atkins over dropped crypto cases, Trump industry ties as agency shifts strategy

As the Securities and Exchange Commission moves to revamp its cryptocurrency regulations, Chair Paul Atkins faced questions from lawmakers about the agency’s steep decline in digital asset enforcement and President Donald Trump’s ties to the industry.

At a House Financial Services Committee hearing on Wednesday, Democratic members pressed Atkins about the agency’s decisions to pause its case against Tron founder Justin Sun and drop its lawsuit against Binance, raising concerns about connections to Trump.

The SEC charged Sun in 2023 with allegedly orchestrating the unregistered sale of crypto securities and manipulating trade volumes, among other charges. Later in February 2025, the SEC requested a stay to explore a potential settlement. Since then, Sun has emerged as a major investor in Trump-linked crypto ventures, committing millions of dollars.

As for Binance, the SEC dropped its litigation against the crypto exchange in May 2025. The SEC sued Binance in 2023 for offering unlicensed services and misrepresenting trading controls. That same year, the exchange and its CEO Changpeng Zhao pled guilty to Bank Secrecy Act violations and agreed to pay over $4 billion to resolve a Justice Department investigation.

Trump later pardoned Zhao. News has since surfaced that a stablecoin launched by Trump's crypto company World Liberty Financial is being used by an Abu Dhabi investment firm for its $2 billion investment in Binance. 

"Explain to me how this happens without any enforcement action," Rep. Stephen Lynch, D-Mass., asked Atkins on Wednesday. 

"The reputational damage that the SEC is suffering right now is unbelievable," Lynch added. "And you're in the seat, sir. It's your responsibility. I'm just asking for an explanation." 

Atkins defended the agency, saying that the SEC has a "robust enforcement effort" and is continuing to bring cases. He was named SEC chair in April 2025, following the departure of former Chair Gary Gensler, who championed some of the agency's largest lawsuits and investigations against crypto industry participants.

The request to pause the Sun case was filed before Atkins formally took office, but the agency dropped its case against Binance in May under his leadership.

During Wednesday's hearing, lawmakers raised concerns about the drop in enforcement cases at the agency. There was a 30% decrease in SEC enforcement actions in the calendar year 2025 compared to the year prior, according to Cornerstone Research. Some of that is part of the norm during changes in SEC leadership, but the consulting firm said 2025 stood out.

Crypto-related cases fell by 60%, according to the firm, which shows a "shift in enforcement priorities." 

Trump concerns

During the hearing, several Democrats repeated previously levied concerns about Trump’s expanding crypto ventures, an issue that has complicated efforts to pass comprehensive digital asset legislation.

Bloomberg estimated that Trump has raked in about $1.4 billion from his crypto ventures, including from World Liberty Financial. The Trump family also holds a 20% stake in the mining firm American Bitcoin.

Rep. Sean Casten, D-Ill., asked if Atkins can point to an instance where investors were put first and "cost the Trump family money as a result."

Rep. Sylvia Garcia, D-Texas, also asked about the president's crypto ties and asked Atkins if Trump, his family, members of his cabinet, or White House staff ever asked Atkins to take or decline any enforcement action. 

Atkins said "no."

Innovation exemption

As lawmakers work on crypto legislation, the SEC has taken several steps to start updating its rules. Last month, the SEC and its sister agency, the Commodity Futures Trading Commission, said they were teaming up to modernize their rules. 

CFTC Chair Michael Selig said he has directed his staff to work with the SEC to consider "joint codification" of Atkins' proposed crypto taxonomy as an "interim measure while Congress finalized legislation." 

Atkins also plans to unveil an innovation exemption to fast-track crypto products. "The innovation exemption that I've been talking about would be cabined, time-limited, transparent, and really anchored in strong investor protection," Atkins said, adding that it is like a sandbox and not picking winners and losers.