A group of senior Democratic lawmakers is taking aim at the U.S. Securities and Exchange Commission, accusing the agency of backing away from its duty to enforce securities laws in the crypto industry. In a strongly worded letter, the lawmakers warn that the SEC’s recent actions could put investors at risk and weaken confidence in U.S. financial markets.
The criticism comes after the SEC quietly ended or dismissed at least a dozen enforcement actions against major crypto companies since early 2025. According to the lawmakers, this pullback began soon after Donald Trump returned to the White House, raising uncomfortable questions about whether politics—not the law—are shaping regulatory decisions.
Among the cases dropped were high-profile lawsuits against Binance, Coinbase and Kraken. These were not weak or speculative cases, Democrats note. In fact, courts had already sided with the SEC by rejecting motions to dismiss and allowing fraud and unregistered securities claims to move forward. Despite that momentum, the agency chose to walk away, citing regulatory discretion rather than legal setbacks.
In the letter sent to SEC Chairman Paul Atkins, Representatives Maxine Waters, Sean Casten and Brad Sherman argue that the timing of these decisions is troubling. They point out that several of the companies that benefited from the enforcement pullback—including Coinbase, Kraken, Ripple, Robinhood and Crypto.com—had donated millions of dollars to Trump’s campaign and inauguration efforts.
While the SEC has not publicly linked the case closures to politics, Democrats say the pattern creates the appearance of “pay-to-play” enforcement, where political connections may influence regulatory outcomes.
Justin Sun under scrutiny
The lawmakers also single out Justin Sun, the founder of the Tron Foundation, whose SEC case remains on hold. While that case is paused, Sun has reportedly invested millions of dollars in crypto ventures connected to Trump. The lawmakers argue that this situation is especially concerning given Sun’s alleged ties to China and the Chinese Communist Party, which they say could pose broader risks to U.S. market integrity.
They are urging the SEC to either lift the stay on Sun’s case or pursue a settlement that reflects what they describe as the strength of the agency’s claims. In addition, the lawmakers are demanding internal documents and communications related to the SEC’s enforcement decisions, including any evidence of political or foreign influence.
A broader fight over crypto regulation
The letter highlights growing tensions around how the U.S. regulates digital assets at a time when crypto is becoming more politically powerful. Democrats argue that the SEC’s sudden shift—from aggressive enforcement to widespread case closures—undermines its credibility as an independent regulator.
Waters, who leads Democrats on the House Financial Services Committee, did not mince words. She warned that the agency’s “whiplash policy reversal” creates the impression that political considerations may be overriding legal judgment. “The American public deserve to know whether the SEC’s independence has been compromised,” she said, adding that justice in U.S. markets must not be subordinated to political interests.
If Democrats regain control of the House in 2026, Waters could once again take the committee’s gavel—setting the stage for deeper scrutiny of how crypto is being regulated in Washington.
Also Read: Coinbase Exit Puts Senate Crypto Bill at a Crossroads
