U.S. lawmakers challenged SEC Chair Paul Atkins over a sharp decline in crypto enforcement actions, raising concerns about dismissed lawsuits and alleged political ties to Trump-linked crypto ventures.

Tensions over crypto regulation resurfaced on Capitol Hill this week as lawmakers questioned Securities and Exchange Commission (SEC) Chair Paul Atkins about the agency’s recent pullback in enforcement actions against the digital asset industry.

During a House Financial Services Committee hearing on Wednesday, 11 Feb., Representative Stephen Lynch said enforcement actions have declined by roughly 60% since President Donald Trump took office and appointed Atkins to lead the SEC. Lynch pointed to the agency’s decision in May 2025 to move for dismissal of its lawsuit against Binance as a prominent example.

The Massachusetts Democrat also raised concerns about foreign investment tied to World Liberty Financial (WLFI), a decentralized finance platform reportedly linked to the Trump family, as well as memecoins associated with the family.

Recent reports indicate that Aryam Investment 1, an Abu Dhabi investment vehicle backed by UAE national security adviser Sheikh Tahnoon bin Zayed Al Nahyan acquired a 49% stake in the startup behind WLFI.

Lynch warned that such developments risk undermining confidence in the crypto sector, claiming the market has fallen 25% over the past month and that ongoing controversies are damaging both consumers and the SEC’s reputation. Atkins rejected the characterization, stating the agency maintains robust enforcement efforts and continues to pursue cases where appropriate.

California Democratic Representative Maxine Waters echoed concerns, arguing that several dismissed lawsuits were dropped despite the SEC previously prevailing in court. She questioned whether political considerations influenced decisions, noting that some crypto executives who benefited from regulatory relief had contributed millions of dollars to Trump and his affiliates.

The exchange comes during a midterm election year, with Democrats signaling increased scrutiny of crypto policy. If the party regains control of at least one chamber of Congress, analysts say legislative efforts to establish clearer crypto market structure rules could face renewed hurdles.

• Why are lawmakers questioning the SEC?
  This is due to enforcement actions against crypto firms reportedly dropping by 60%.
• What case was highlighted during the hearing?
  Legislators highlighted the dismissal of the SEC’s lawsuit against Binance as one of the examples of the reduction in enforcement actions.
• What is World Liberty Financial (WLFI)?
  A DeFi platform reportedly linked to the Trump family.
• Could this impact crypto regulation?
  Yes, election-year politics may affect future crypto legislation.

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