Concerns Over SEC's Enforcement Priorities
Liberal lawmakers are accusing the US Securities and Exchange Commission (SEC) of abandoning crypto enforcement cases and blindly falling in line with the demands of crypto executives. Democratic Party representatives in the Financial Services Committee sent a letter to SEC Chairman Paul Atkins, asking the regulator if it knowingly retreated from enforcing laws on Coinbase, Binance, and Kraken.
The policymakers, led by Rep. Maxine Waters, stated that the commission has dismissed or closed at least a dozen crypto-related cases, including actions it had previously deemed legally sound. Several of those cases had already survived motions to dismiss and received favorable rulings from federal judges.
“Given the industry’s history of investor-harm and the clear mandate of the securities laws to protect market participants, this turn raises troubling questions about the SEC’s priorities and effectiveness. Frankly, it puts both investors and the US economy at risk,” wrote the representatives.
SEC's Retreat from Cases with Probable Cause
In the letter, Democrats criticized the SEC for turning away from “meritorious” litigation even though the courts had already validated the commission’s claims. The lawmakers suggested this pattern has fueled perceptions that enforcement decisions are being influenced by outside interests and the Trump administration.
Waters and her colleagues noted that the Commission’s actions occurred while crypto executives and firms provided financial support to the US president and his allies. However, according to the letter, securities laws require the Commission to protect market participants, regardless of their political bias.
The Binance Case Dismissal
Significant attention was devoted to the SEC’s dismissal of its case against Binance after it sued the crypto exchange and its founder, Changpeng Zhao, in June 2023 for securities violations. The entity accused the company of deceptive practices, conflicts of interest, and operating in America without proper registration.
Zhao pleaded guilty to criminal charges related to Bank Secrecy Act violations in Binance’s compliance failures and served a prison term, which he was pardoned for by US President Trump last year. In June 2024, US District Judge Amy Berman Jackson upheld most of the SEC’s allegations and allowed the case to proceed. The court found that the regulator had plausibly alleged fraud and unregistered securities activity in its token listings and services.
Despite that ruling, the SEC dismissed the case with prejudice in May 2025 while “exercising discretion,” away from a judgment on the merits of its claims. Liberals stated the dismissal was concerning, given the seriousness of the allegations and the court’s findings, in addition to the Trump administration’s pardon of Zhao, claiming the POTUS was ensuring he and his companies “would avoid accountability.”
Coinbase and Kraken Cases Also Dropped
The documents also discussed the Commission’s retreat from its actions against Coinbase and Kraken, where federal judges had also rejected the companies’ attempts to dismiss the lawsuits, similar to the Binance case. The SEC charged Coinbase in June 2023 with operating as an unregistered exchange, broker, and clearing agency, alongside failing to register its staking services. In the following year, a federal judge sided with the Commission and ruled that certain tokens sold on Coinbase qualified as securities under federal law.
Fast forward to February last year, the commission reached an agreement with the US-based crypto trading platform to dismiss the case, citing the pending work of its Crypto Task Force as justification for ending the litigation. Kraken was facing similar allegations in a lawsuit filed in 2023, but the Commission and Kraken jointly moved to dismiss the case last March.
FSC members Rep. Waters, Sean Casten, and Brad Sherman surmised that the decision to drop cases against crypto firms occurred at a time when political donations were flowing into the US government, with at least $85 million directed to President Trump’s reelection campaign. The firms whose cases or investigations were dismissed included Coinbase, Kraken, Ripple, Robinhood, and Crypto.com, which all reportedly donated at least $1 million to Trump’s inauguration each.