SEC chair defends pause in Justin Sun enforcement case scrutiny

SEC’s Justin Sun case pause fuels scrutiny of Trump-linked crypto ties and a broader shift from regulation-by-enforcement to formal rulemaking.

Securities and Exchange Commission Chair Paul Atkins defended the agency’s stalled enforcement case against Tron founder Justin Sun during a congressional hearing, citing legal restrictions on discussing active litigation.

Speaking at the briefing, Atkins stated the SEC remains committed to transparency and regulatory clarity, but emphasized that rules governing active litigation prevent public discussion of specific cases. The matter involving Sun has remained inactive for approximately 11 months, according to reports.

The SEC filed suit against Sun in 2023, alleging unregistered securities offerings and manipulative trading practices. The complaint included allegations of more than 600,000 wash trading transactions designed to inflate trading volumes of the TRX token. In February 2025, both the SEC and Sun’s legal team jointly filed for a stay in proceedings.

Representative Maxine Waters, ranking Democrat on the House Financial Services Committee, questioned Atkins about the agency’s handling of the investigation during the hearing. Waters stated that while the SEC considered resolution options, Sun developed relationships within President Trump’s political network through World Liberty Financial Inc. The California lawmaker questioned whether those connections influenced the agency’s decision to halt enforcement activity.

Waters also referenced allegations from Sun’s former girlfriend regarding evidence of TRX manipulation. Atkins declined to comment on case specifics, citing legal restrictions. He told lawmakers he would provide a confidential briefing and would engage further “to the extent the rules allow.”

Atkins defends Justin Sun enforcement

When asked whether the SEC would continue pursuing fraud in cryptocurrency markets, Atkins said the agency acts where securities laws apply.

The pause in the Sun case coincides with the SEC’s withdrawal from multiple high-profile cryptocurrency enforcement actions. Over the past year, the agency has dropped or reduced cases against Coinbase, Binance, Ripple, Kraken, and Robinhood, according to public records.

SEC leadership has characterized the previous administration’s approach as regulation by enforcement. Atkins stated the agency is moving toward structured rulemaking and clearer statutory guidance. The chair said the SEC is coordinating with the Commodity Futures Trading Commission on anticipated legislative changes related to the proposed CLARITY Act.

In a January 2026 letter, Representatives Waters, Ritchie Torres, and Stephen Lynch requested explanations for the withdrawal or pause of more than a dozen cryptocurrency cases.

Democratic lawmakers have linked the enforcement changes to President Trump’s cryptocurrency investments. Bloomberg estimated Trump generated $1.4 billion from cryptocurrency ventures, and the Trump family reportedly holds a 20% stake in mining company American Bitcoin. Trump has nominated Kevin Warsh to succeed Jerome Powell as Federal Reserve Chair when Powell’s term expires in May.