House Democrats have escalated their criticism of the Securities and Exchange Commission (SEC), asserting that the agency’s recent ‘retreat’ from aggressive crypto enforcement poses significant national security risks. The core of the accusation centers on the alleged lenient treatment of major offshore crypto operators, specifically calling out concerns surrounding Justin Sun, the founder of the Tron blockchain and a prominent figure associated with the Huobi (HTX) exchange.
In a formal letter addressed to SEC Chairman Gary Gensler, key Democratic representatives reportedly demanded transparency regarding the enforcement decisions related to foreign crypto entities, arguing that lax oversight creates dangerous vulnerabilities. The Democrats emphasized that figures like Sun, who allegedly maintain deep and complex ties to Beijing, present potential avenues for state influence, sanctions evasion, and intellectual property theft within the U.S. financial system. They argue that if the SEC softens its regulatory stance, it effectively grants foreign-backed firms an undue advantage and undermines broader U.S. efforts to secure financial infrastructure.
The ‘crypto retreat’ referenced in the criticism includes recent instances where the SEC has reportedly either dropped long-standing investigations or pursued settlement agreements that critics deem overly favorable to the defendant. Democrats are urging the SEC to maintain a strict focus on investor protection while simultaneously coordinating with national security agencies, such as the Treasury Department and the FBI, to ensure that crypto platforms operating in the U.S. are not susceptible to foreign malign influence. The letter demands detailed answers regarding whether any political or external pressure influenced the reported softening of enforcement actions against high-profile international crypto figures.
Source: Democrats Blast SEC Over Crypto Retreat, Justin Sun’s Alleged China Ties
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