On Wednesday, lawyers for the Securities and Exchange Commission and Justin Sun, a 34-year-old Chinese crypto entrepreneur, asked a federal judge to put the agency’s case on hold, citing the interests of both sides and “the public’s interest.”
The pause is a 180 for the SEC, America’s top financial regulator, which two years ago charged Sun and his companies — Tron, BitTorrent, and Rainberry — with selling unregistered securities and fraudulently manipulating the price of digital token Tronix. Sun and his companies sought to have the case dismissed.
Sun is a polarizing figure within the world of crypto, in which he has become one of the most prominent investors in the World Liberty Financial crypto project, backed by the Trump family. Sun’s $75 million purchase of World Liberty tokens, which he’s touted in social media posts, could set the Trump family up to eventually collect tens of millions of dollars, as the family is entitled to 75% of the tokens’ revenues, according to the company. Sun is also an official adviser to World Liberty, which lists President Donald Trump as its “chief crypto advocate” and his son Barron as its “DeFi visionary.”
World Liberty is just one of several crypto projects the president and his family have set up in recent months, raising concerns about potential corruption. By its nature, crypto offers a particularly easy way to, anonymously or otherwise, funnel money into assets that directly benefit the president and his family.
“Now anyone in world can essentially deposit money into bank account of President of USA with a couple clicks,” tweeted Anthony Scaramucci, former Trump White House communications director, after Trump launched a digital token known as a memecoin last month. “Every favor — geopolitical, corporate or personal — is now on sale, right out in the open.”
The SEC declined to comment. Neither the White House nor Sun responded to a request for comment.
“This is, I guess, going to be the new approach — hands off crypto, not enforcing fraud … and I don’t think it’s going to end well,” Richard Painter, a law professor at the University of Minnesota and an ethics lawyer for the George W. Bush administration, told me. “The SEC is going to back off — because that’s what the Trump administration wants — on whatever enforcement they can do. I think it’s a very worrisome situation.”
Meanwhile, in a widely expected move, the SEC on Thursday officially dropped its enforcement action against US crypto exchange Coinbase, citing “the Commission’s ongoing efforts to reform and renew its regulatory approach to the crypto industry.”
Compounding conflicts of interest
The Sun case comes as the Trump administration appears to be opening the door to potential corruption beyond crypto. Critics across the political spectrum say it’s a troubling trend for a president and a White House that is ditching guardrails at an alarming speed and gutting the government’s ability to combat corruption.
Since returning to office over a month ago, the president has paused all investigations into corporate foreign bribery and fired inspectors general from more than a dozen federal agencies. His Justice Department has moved to suspend its case against New York Mayor Eric Adams, whom prosecutors had accused of soliciting bribes from Turkish nationals (allegations Adams denies). Trump pardoned former Illinois Gov. Rod Blagojevich, who spent eight years in prison on multiple corruption charges, including scheming to sell a vacant Senate seat. And earlier this month, Trump said that Elon Musk’s financial disclosures would be kept confidential even as Musk wields power over federal agencies and contracts that directly impact his own business empire.
The president has also come full circle on crypto, which he once dismissed as a scam.
That’s been a mixed blessing for the industry, which has been working to shed its well-earned reputation for illicit activities. On one hand, crypto advocates seeking to establish a legitimate regulatory framework have welcomed Trump’s broadly positive rhetoric on digital assets. But Trump’s memecoin ventures — along with his pardoning of Ross Ulbricht, the founder of the Silk Road criminal enterprise, and the SEC’s heel-turn on its case against Sun — are the kind of fringe causes that reinforce the industry’s association with bad actors.
Within crypto, Sun is a polarizing figure. While the Tron community sees him as a visionary, his detractors see him as an opportunist who thrives on hype, said Gareth Rhodes, managing director at advisory firm Pacific Street. “Both supporters and detractors can agree he wields substantial influence in crypto,” he added.
Sun, who garnered headlines last year for his $6.2 million purchase of a banana duct-taped to a wall, is “among the least sympathetic litigants in the industry,” Eric Soufer, a political adviser to major crypto companies, told me Thursday.
The SEC and Sun’s lawyers, in their letter to the judge, proposed submitting a status report 60 days after a stay, at which point there would likely be more details about the case’s resolution, including any possible settlement.
“Obviously his connections to Trump Coin are going to raise questions,” Soufer added. “But we need to see what the actual settlement looks like before we can judge just how much politics may have played a role.”
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