SEC Chairman Confronted Over Paused 600,000 Wash Trade Case
During a House Financial Services Committee hearing on February 11, U.S. Securities and Exchange Commission Chairman Paul Atkins faced sharp questioning regarding the agency's handling of its case against Tron founder Justin Sun. Representative Maxine Waters demanded an explanation for why the enforcement action was paused, directly questioning whether Sun's reported ties to the Trump administration, which appointed Atkins, influenced the decision.
The original lawsuit, filed by the SEC in 2023, accused Sun of market manipulation by artificially inflating the trading volume of the TRX token. The agency alleged Sun’s employees conducted "more than 600,000 wash trades" using accounts he controlled. The case was paused a year ago to explore a "potential resolution," but no settlement has been announced. In the hearing, Atkins stated he could not discuss individual cases but offered to provide a confidential briefing to lawmakers.
Atkins Signals End of Regulation-by-Enforcement Era
The exchange highlights a significant pivot in the SEC's approach to digital assets under its new leadership. Atkins' commission has systematically paused or dropped numerous high-profile enforcement actions initiated under the previous administration, including cases targeting Binance, Ripple, Coinbase, and Kraken. When questioned on his priorities, Atkins stated the SEC will focus on "real fraud" involving securities, signaling a clear departure from the prior "regulation-by-enforcement" doctrine.
Instead of pursuing litigation, Atkins confirmed the SEC is developing a clearer regulatory path for the crypto industry. He stated the agency is working on rules "consistent with what's in the Clarity Act" passed by the House. This effort, conducted jointly with the Commodity Futures Trading Commission (CFTC) under "Project Crypto," aims to define jurisdictional boundaries and provide much-needed certainty for companies operating in the United States.
