Two members of Congress are calling on the U.S. Securities and Exchange Commission (SEC) to address questions that may affect how cryptocurrency companies go public on U.S. exchanges.
In a letter sent Wednesday to SEC Chairman Paul Atkins and the acting director of the Division of Corporation Finance, Cicely LaMothe, Senator Jeff Merkley and Representative Sean Casten questioned the timing of the agency's decision to drop its enforcement case against Tron founder and CEO Justin Sun.
The Tron founder previously faced a lawsuit filed by the SEC in 2023, accusing him of offering unregistered securities, but the agency requested to pause the case in February, one month after former Chairman Gary Gensler left office.
Merkley and Casten suggested that Sun's "substantial investments" in cryptocurrency venture capital controlled by former President Donald Trump and his family, including World Liberty Financial and his meme coin Official Trump (TRUMP), may have influenced the case's suspension.
The two lawmakers also questioned Tron's reverse merger to go public on Nasdaq in July, claiming that this move posed "financial and national security risks" due to its alleged connections to the Chinese government.
"In light of the series of issues raised by Mr. Sun's investments in the President's cryptocurrency venture capital and his plans to take Tron public through a reverse merger, we urge the SEC to ensure that Tron Inc. meets the stringent standards required for listing on U.S. exchanges," the letter stated.
The lawmakers questioned the application process for Tron's reverse merger and whether the SEC could "protect the American public" through any settlement with Justin Sun.
Although the letter specifically names Tron and its CEO, it may lead to broader scrutiny of other foreign cryptocurrency companies attempting to go public in the U.S. through similar structures.
Cointelegraph reached out to a Tron spokesperson for comment but had not received a response by the time of publication.
Under pending market structure legislation, the lawmakers' concerns may become moot.
Since Trump's inauguration, the SEC under Atkins has made significant policy adjustments, including dropping investigations or enforcement actions against several cryptocurrency companies. However, the foundational framework for regulating and enforcing digital assets may soon change, given the Republican agenda in Congress.
In July, the Republican-controlled House passed the CLARITY Act, a bill aimed at establishing a cryptocurrency market structure. The leadership of the Senate Banking Committee indicated they plan to create their version of a market structure bill based on this legislation, which is expected to be signed into law by 2026.
While the final text of any potential bill remains unclear, many proposed drafts suggest modernizing regulations to meet the demands of the digital asset industry and establishing clear roles for U.S. financial regulators, the SEC and the Commodity Futures Trading Commission (CFTC).
If passed, the final framework could eliminate barriers or impact the restrictions on how companies like Tron go public on U.S. exchanges.
Related: Crypto executives meet with U.S. lawmakers to discuss Bitcoin (BTC) reserves and market structure legislation
Original article: “U.S. lawmakers question SEC on Tron IPO, urge probe into Justin Sun”
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