Democratic lawmakers skewered SEC Chair Paul Atkins at a hearing Wednesday, accusing the regulator of turning a blind eye to crypto scams with connections to President Donald Trump—and weakening the legitimacy of the digital assets industry as a result.
“People are losing trust,” Rep. Stephen Lynch (D-MA) told Atkins during a Wednesday hearing before the House Financial Services Committee. “This is not good for crypto, it’s certainly not good for consumers.”
“And it’s awful,” he continued, “the reputational damage the SEC is suffering right now.”
Lynch cited the SEC’s dismissal of numerous high-profile lawsuits against crypto firms, including one against Binance, which has played a major role in facilitating the growth of the Trump family’s crypto company, World Liberty Financial.
In addition to the SEC’s dismissal of its case against Binance, President Trump pardoned Binance founder Changpeng Zhao in October. Zhao previously pleaded guilty to violating U.S. money laundering laws and spent four months in prison.
In a separate line of questioning, Rep. Maxine Waters (D-CA) slammed Atkins over the SEC’s decision last year to indefinitely pause its lawsuit against controversial crypto billionaire Justin Sun, the founder of Tron.
The lawsuit accused Sun not only of offering unregistered securities, but also of fraudulently manipulating the price of a crypto token, TRX, through “extensive wash trading.” It was paused months after Sun purchased $75 million worth of the Trump family’s WLFI token.
Sun was also one of the top holders of Trump’s meme coin—a status the entrepreneur used to attend a private dinner with the president last spring.
Last week, a woman identifying herself as Sun’s ex-girlfriend said she had substantial evidence of Sun’s direct involvement in insider trading and market manipulation schemes, which she said she had reported to the SEC. Sun subsequently denied the allegations.
On Wednesday, Waters asked Atkins if he intended to investigate the new claims against Sun, or resume the SEC’s case against the crypto entrepreneur. But the SEC chair declined to comment on the case, or any others brought up during the hearing.
At another point in the hearing, House Democrats cited the recent massive, historic crypto market downturn, and argued investors are losing faith in the sector due at least partially to the SEC’s new policies.
As the digital assets market sheds more than a trillion dollars in value, some of President Trump’s most reliable allies in the ecosystem have become more vocal about the potential damage inflicted by his personal crypto ventures.
“He literally used his voting base as exit liquidity,” one prominent, generally pro-Trump crypto influencer bemoaned this week. “This is not the behavior of an actual leader.”
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