US lawmakers challenge SEC on Tron IPO, press for probe into Justin Sun

2025-09-18 20:04:20

Two members of Congress have called on the Securities and Exchange Commission (SEC) to answer questions that could impact how crypto companies go public on US exchanges

In a Wednesday letter to SEC Chair Paul Atkins and acting director of the commission’s division of corporation finance Cicely LaMothe, Senator Jeff Merkley and Representative Sean Casten questioned the agency’s timing on dropping an enforcement case against Tron founder and CEO Justin Sun.

The Tron founder had been facing a lawsuit filed by the SEC in 2023 over allegations of offering unregistered securities, but the agency asked for a stay in the case in February, a month after the departure of former Chair Gary Gensler.

SEC, Donald Trump, IPO, Tron, Justin Sun Wednesday letter to SEC officials. Source: Representative Sean CastenMerkley and Casten suggested that Sun’s “sizable investments” in crypto ventures controlled by US President Donald Trump and his family, including World Liberty Financial and his memecoin, Official Trump (TRUMP), could have influenced the case being halted.

The two lawmakers also challenged Tron going public on the Nasdaq in July through a reverse merger, claiming that the move “raises financial and national security risks” due to alleged links with the Chinese government.

“Given the litany of issues associated with Mr. Sun’s investments in the President’s cryptocurrency ventures and his plans to take Tron public through the reverse merger process, we request that the SEC ensure that Tron Inc. meets the rigorous standards necessary to be listed on US stock exchanges,” the letter reads.

Related: Justin Sun urges Trump-linked WLFI to unlock ‘unreasonably’ frozen tokens

The lawmakers questioned Tron’s application process for going public via a reverse merger and whether the SEC could “protect the American public” through any settlement with Sun.

Although it specifically names Tron and its CEO, the letter could draw broader scrutiny on other foreign crypto companies trying to go public in the US through similar structures.

Cointelegraph reached out to a Tron spokesperson for comment, but had not received a response at the time of publication.

Lawmakers’ questions may be moot under pending market structure legislation

The SEC under Atkins has made significant policy changes since Trump took office, including dismissing investigations or enforcement actions into several crypto companies. However, the underlying framework by which the commission regulates and enforces digital assets could soon change, given Republicans’ plans in Congress.

In July, the Republican-controlled House of Representatives passed the CLARITY Act, a bill to establish a crypto market structure. Leadership in the Senate Banking Committee has said that they plan to build on the legislation to create their own version of a market structure bill, expected to be signed into law by 2026.

Though the final text of any potential bill is still unclear, many of the proposed drafts have suggested modernizing regulations to comply with the digital asset industry, and establishing clear roles for the US’ financial regulators, the SEC and Commodity Futures Trading Commission (CFTC).

The final framework, if passed, could remove barriers or affect restrictions on how companies like Tron go public on US exchanges

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