Michaela
Two members of Congress, Senator Jeff Merkley and Representative Sean Casten, have called on the Securities and Exchange Commission (SEC) to explain its decision to drop an enforcement case against Tron founder Justin Sun and clarify how it handles crypto firms going public on U.S. exchanges.
Key proints:
- Lawmakers Jeff Merkley and Sean Casten have asked the SEC to explain its dropped fraud case against Justin Sun and clarify rules for crypto listings.
- They cited Sun’s ties to Donald Trump, including investments in the $TRUMP memecoin and World Liberty Financial, raising conflict of interest concerns.
- The letter also flagged Tron’s Nasdaq debut via reverse merger, warning of financial, security, and disclosure risks tied to the process.
In a September 17 letter addressed to SEC Chair Paul Atkins and Acting Director of the Division of Corporation Finance Cicely LaMothe, Merkley and Casten raised concerns about Sun’s business ties with President Donald Trump. The lawmakers questioned whether these connections created potential conflicts of interest or risks of foreign influence, citing the SEC’s decision during the Trump administration to drop its fraud case against Sun.
“Mr. Sun’s decision to take his company public, potentially with the assistance of members of the Trump family, raises significant national security and investor protection concerns,” the letter wrote. “We urge the SEC to commit to ensuring full oversight of Mr. Sun and his company’s attempts to access U.S. capital markets, with particular attention to his concerning ties to President Trump and his family,” it added.
Merkley and Casten noted that the SEC filed a lawsuit against the Tron founder in 2023, accusing Sun of inflating the price of TRX, the native token of his Tron blockchain, to secure $31 million in unlawful gains. The lawmakers also suggested that Sun’s concerns over the case appeared to ease following Donald Trump’s re-election in November 2024.
Additionally, the two members of Congress spotlighted Sun’s significant investments in two cryptocurrency ventures they said “directly enriched the President and his family.” They emphasized that Sun is the largest publicly known investor in both the $TRUMP meme coin and World Liberty Financial (WLF), a decentralized finance initiative backed by Trump and his family.
Merkley and Casten raised concerns over Tron’s July debut on Nasdaq through a reverse merger, arguing the listing poses potential financial and national security risks because of the project’s reported ties to the Chinese government.
“The SEC has previously identified instances of fraud and other abuses involving reverse merger companies,” the letter pointed out. “Reverse merger transactions can enable private companies to bypass the disclosures, scrutiny, and months-long process associated with a formal Initial Public Offering (IPO),” it added.
Furthermore, the two members of Congress urged the SEC to confirm that Tron Inc. complies with the strict requirements for listing on U.S. stock exchanges. They also pressed the agency to address a series of questions tied to their concerns, setting an October 2 deadline for a response.
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Michaela has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
