U.S. lawmakers send letter to SEC urging investigation into Sun Yuchen

U.S. lawmakers are pressuring securities regulators to impose stricter scrutiny on cryptocurrency mogul Justin Sun and his company Tron.

On September 17, Democratic Senator Jeff Merkley and Democratic Representative Sean Casten sent a letter to U.S. Securities and Exchange Commission (SEC) Chairman Paul Atkins, issuing a stern inquiry to the agency.

The two Democratic lawmakers demanded that the SEC explain why it suspended enforcement actions against Justin Sun and raised serious concerns about Tron’s move to go public on Nasdaq through a reverse merger, arguing that this could pose financial and national security risks. They urged the SEC to conduct a thorough investigation into the matter.

Is the suspension of enforcement related to the Trump family?

In 2023, the SEC had filed a lawsuit against Tron founder and CEO Justin Sun, accusing him of offering unregistered securities. However, in February of this year, just a month after the departure of former SEC Chairman Gary Gensler, the SEC suddenly requested to halt the case.

Merkley and Casten hinted in their letter that Sun's "huge investments" in cryptocurrency projects controlled by U.S. President Trump and his family—including World Liberty Financial (WLFI) and TRUMP Coin—might have influenced the SEC's decision to suspend its case against him.

This allegation links Sun to key figures in U.S. politics, making an already complex cryptocurrency regulatory issue even more sensitive. The lawmakers hope the SEC will explain the timing and rationale behind its suspension of enforcement actions to dispel concerns about its fairness and independence.

Are there risks associated with Tron's listing?

Meanwhile, the two lawmakers expressed serious concerns about Tron's July move to go public on Nasdaq through a reverse merger, stating that this "raises financial and national security risks."

The letter explicitly demanded that the SEC "ensure that Tron Inc. meets the stringent standards required for listing on U.S. stock exchanges" and called for a detailed review of Tron's listing application process.

A reverse merger, as a method of going public, typically allows private companies to bypass the traditional initial public offering (IPO) process by merging with an already listed company, thereby entering the public market more quickly. However, the lawmakers' focus is on Tron's background and its potential connections, which raises serious scrutiny over its compliance and transparency regarding the listing.

Justin Sun's recent controversies—blacklisted by WLFI

This congressional scrutiny comes as Justin Sun is embroiled in another high-profile public dispute.

Wallstreetcn reported that, according to media reports and on-chain data, the cryptocurrency project World Liberty Financial (WLFI), backed by the Trump family, had previously blacklisted one of Justin Sun's wallet addresses This move directly locks up over $100 million worth of unlocked WLFI tokens in the address. The trigger for the action was the previous transfer of approximately $9 million worth of tokens from that address.

Sun Yuchen responded on social media platform X, stating that the related transfer was merely a small test and address diversification operation, not a sale, and would not impact the market. However, the market reacted strongly, with the WLFI token price experiencing a significant drop.

At the same time, unverified user speculation circulated in the community, suggesting that Sun Yuchen might have executed a complex operation to "escape like a cicada shedding its shell," cashing out funds without directly crashing the market. However, AI analysis from blockchain analytics platform Nansen indicated that the real reason for the price drop stemmed from large deposit flows at exchanges, and Sun Yuchen's transfer occurred after the price decline.

The Regulatory Framework for the Crypto Industry is Facing Restructuring

The inquiries from lawmakers come against the backdrop of potential significant changes in U.S. crypto regulatory policy. Since Trump took office, the SEC, led by Chairman Paul Atkins, has adjusted some policies, including dropping investigations or enforcement actions against several crypto companies.

However, the entire regulatory framework for digital assets is undergoing restructuring. In July of this year, the Republican-controlled House passed the "CLARITY Act," aimed at establishing a clear structure for the crypto market. The Senate Banking Committee also plans to introduce its version based on this, with the relevant bill expected to be signed into law by 2026.

Although the final text of the bill is not yet clear, most drafts tend to push for regulatory modernization and clarify the division of responsibilities between the SEC and the Commodity Futures Trading Commission (CFTC). If the bill is ultimately passed, it could change the rules and thresholds for companies like Tron to list in the U.S., directly impacting the issues currently concerning lawmakers