Trump-backed companies succumb to class-action lawsuits? Democrats urge SEC to respond.
Democratic lawmakers in the U.S. House of Representatives have strongly criticized the Securities and Exchange Commission (SEC) for its efforts to curtail cryptocurrency enforcement. The recent suspension of the Ripple lawsuit has raised questions about the SEC's independence.
In a letter to SEC Chairman Paul Atkins on the 15th (local time), Democratic lawmakers claimed that since early 2025, the SEC has dismissed or closed more than a dozen lawsuits against major cryptocurrency companies, including Binance, Coinbase, Kraken, and Ripple, “even after receiving favorable rulings in court.” They raised concerns about the possibility of “pay-to-play,” pointing out that these closed companies each donated at least $1 million (approximately 1.4736 billion won) to President Trump’s inauguration.
The Justin Sun case is under scrutiny for alleged political connections.
The critique focused on the SEC's actions surrounding Tron (TRX) founder Justin Sun. The SEC has kept its lawsuit against Sun "stayed" for 11 months and, unlike other cases, has yet to dismiss it. Democratic lawmakers warned that this decision sends a "dangerous signal that political influence can influence law enforcement."
The lawmakers noted that Sun had announced in September 2025 that he would purchase an additional $10 million worth of $WLFI tokens issued by World Liberty Financial (WLFI), a company known to be owned by the Trump family. They also requested the SEC to clearly disclose whether he had any information linking him to individuals or companies with ties to the Chinese government or the Chinese Communist Party.
Legal experts refute claims that Ripple lawsuits cannot be reopened.
With the SEC effectively concluding its legal dispute with Ripple, concerns have been raised that the case could be reopened due to political factors. However, cryptocurrency lawyer Bill Morgan countered, citing the principle of "res judicata," which states that a previously decided case cannot be reopened on the same issue.
Morgan drew the line, saying, "The SEC cannot re-fight a case that's already been resolved. It's legally impossible. We have to accept that." He also emphasized the "realistic limitations" on the possibility of major corporate lawsuits like Ripple and Binance being refiled.
Demand for Transparency to Restore Trust in the SEC
This controversy raises questions about whether the SEC, as the primary regulator overseeing the cryptocurrency industry, is fulfilling its primary role of protecting investors. Especially in cases like the Justin Sun case, where suspicions of political favors are raised, this could severely damage trust in the SEC's independence and impartiality.
The letter from Democratic lawmakers warned of these risks and urged the SEC to act based on transparent communication and objective judicial standards. It remains to be seen how the SEC will explain itself in the future and whether it will adjust its policy stance in the face of public and congressional pressure.
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