Democrats Ask SEC to Explain Lack of Enforcement on Trump-Linked Crypto Entities

Three Democrats on the House Financial Services Committee have published an open letter to Securities and Exchange Commission (SEC) Chairman Paul Atkins regarding the lack of crypto enforcement actions coming from the federal agency. “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,†reads the letter. “Frankly, it puts both investors and the U.S. economy at risk.â€

The dismissals of previous cases brought against crypto exchanges Binance, Coinbase, and Kraken are covered in the letter signed by Maxine Waters, Sean Casten, and Brad Sherman. Additionally, the letter highlights the substantial amount of money provided by Coinbase, Kraken, and other members of the cryptocurrency industry to the 2024 Trump campaign. “The unjustified decision by the SEC to walk away from these and other meritorious enforcement cases against crypto firms has created the unmistakable inference of a pay-to-play scheme,†alleges the letter.

The crypto industry spent a record amount of money on the 2024 election cycle, totaling $133 million, with a significant portion allocated to Trump’s presidential campaign and other crypto-supporting candidates nationwide, according to OpenSecrets. Trump embraced the crypto industry in a speech at the Bitcoin 2024 conference, where he said he would embrace the technology and make the United States the crypto capital of the world.

Former SEC Chairman Gary Gensler, who held that role during the Biden administration, was generally seen as a villain by the crypto industry, as the agency brought many enforcement actions against crypto companies and promoters due to the agency’s view that there were rampant securities violations occurring in the sector.

The crypto industry’s lobbying efforts have proven to be worth the effort so far, with the stablecoin-focused GENIUS Act passing last year and another bill intended to provide regulatory clarity for crypto, known as the CLARITY Act, currently under review in the Senate after passing the House. Just this week, the Senate Banking Committee’s markup of its version of the CLARITY Act was delayed after Coinbase CEO Brian Armstrong came out against the draft version of the bill. The delay appears to be driven by competing interests from the traditional banking and crypto sectors lobbying for preferential treatment.

According to the letter from House Democrats, the SEC has the opportunity to reverse this trend of an apparent pay-for-play scheme with the case of TRON founder Justin Sun, who had a court stay his enforcement action rather than dismiss it entirely. Sun has multiple ties to Trump-affiliated crypto tokens, namely his holdings in World Liberty Financial’s WLFI and the TRUMP memecoin. On the other hand, it should be noted that Sun’s WLFI tokens were previously frozen by World Liberty Financial after the TRON founder moved $9 million worth of his token holdings, potentially indicating an intention to sell.

Honored to support @POTUS and grateful for the invitation from @GetTrumpMemes to attend President Trump’s Gala Dinner as his TOP fan!

As the top holder of $TRUMP, I’m excited to connect with everyone, talk crypto, and discuss the future of our industry. 🇺🇸 https://t.co/FYb39LTwDz

— H.E. Justin Sun 👨â€ðŸš€ 🌞 (@justinsuntron) May 20, 2025

President Trump has also faced allegations of clear corruption in the case of the pardon granted to former Binance CEO Changpeng “CZ†Zhao, who was serving time for his role in the relaxed anti-money laundering restrictions found at the crypto exchange during his time as the chief executive. Notably, Binance holds roughly $2 billion worth of World Liberty Financial’s USD1 stablecoin on its books, which provides tens of millions of dollars in annual revenue to the stablecoin issuer. Binance also recently expanded its integrations with USD1 in December.

The developers of Samourai Wallet, which is a privacy-focused bitcoin wallet, were also recently sentenced for charges related to the use of their software for money laundering purposes; however, their request for a pardon has not been fully answered as of yet, with Trump claiming it would be reviewed. Of course, the Samourai Wallet developers do not have any business dealings with Trump-affiliated entities, so their pardon may not be a priority.

While Trump originally claimed he would make the United States the “Bitcoin superpower†before his election in 2024, his second term in office has clearly been more about further enriching the centralized entities that operate in crypto, whether they be centralized exchanges or himself, rather than embracing the decentralization of Bitcoin.