House Democrats press SEC over pausing Justin Sun case, citing 'pay-to-play' concerns

Three U.S. House Democrats are accusing the Securities and Exchange Commission of retreating from its enforcement duties in the crypto sector and calling on Chairman Paul Atkins to explain its pullback from high-profile crypto cases — including the case against Tron founder Justin Sun.

In a Thursday letter to Atkins, House Representatives Maxine Waters, Sean Casten, and Brad Sherman expressed alarm over the SEC's dismissal of more than a dozen crypto-related cases since early 2025, including litigation against Binance, Coinbase, and Kraken.

"Given the industry's history of investor-harm and the clear mandate of the securities laws to protect market participants, this turn raises troubling questions about the SEC's priorities and effectiveness," the letter said.

The lawmakers argued that the SEC's retreat has coincided with a surge in political spending by crypto firms, creating what they described as an "unmistakable inference of a pay-to-play scheme."

According to the letter, crypto companies donated at least $85 million to President Trump's reelection campaign, while firms whose enforcement actions were dismissed in 2025 — including Coinbase, Kraken, Ripple, Robinhood, and Crypto.com — each contributed at least $1 million to Trump's inauguration. 

Pressing Sun

The lawmakers focused particular attention on the SEC's pause of its enforcement action against Justin Sun, saying the extended pause in the agency's enforcement suggests that politically connected figures may be securing preferential treatment. 

They noted that Sun invested more than $75 million in Trump-linked crypto ventures, including World Liberty Financial, in late 2024 and early 2025.

Sun was sued in 2023 for allegedly orchestrating the unregistered offer and sale of crypto securities, manipulating trading volumes, and engaging in unlawful celebrity promotion. In February 2025, the SEC requested a stay to explore a potential settlement.

"The SEC's request to stay the Sun case, which has now been in place for 11 months, signals to the market that securities laws are enforced selectively, and that those with sufficient political influence can evade accountability," the lawmakers wrote.

The Democratic lawmakers also raised national security concerns about Sun's alleged ties to China, pointing to his involvement in research programs at China's Central Party School, publications in state media platforms, and his past claims of connections to Chinese officials. 

Alongside the letter, the lawmakers issued a separate document preservation request for all communications related to the decision to pause the Sun litigation, including any contacts with third parties attempting to influence the outcome.

Sun pushes back

A spokesperson for Justin Sun told The Block that the lawmakers' letter "contains numerous misstatements of the record and of fact," including claims about Sun's citizenship and residence, and accused the lawmakers of attempting to improperly influence the SEC's decision-making.

The spokesperson described Sun as "a responsible member of the digital assets community" and cited his role in helping establish the T3 Financial Crime Unit, a collaboration between Tron, Tether, and TRM Labs that has worked with law enforcement globally to freeze more than $300 million in illicit assets.

The spokesperson added that the SEC matter remains pending and said Sun has not sought to influence its outcome, respects the agency's independence, and is engaging through appropriate legal channels. "He has not requested special treatment, nor conditioned any commercial activity on regulatory decisions," they said.

Updated with comment from a spokesperson for Justin Sun.