The article reveals a significant shift in the U.S. Securities and Exchange Commission's (SEC) regulatory stance towards the cryptocurrency industry during Trump's second term, including the withdrawal, suspension, or mitigation of lawsuits against numerous cryptocurrency companies, particularly those associated with Trump. The investigation found that the SEC's actions were highly consistent with the Trump administration's supportive policies towards cryptocurrencies, raising concerns about a conflict of interest.
Article authors: Ben Protess, Andrea Fuller, Sharon LaFraniere, Seamus Hughes
Article compiled and sourced from Mars Finance.
A cryptocurrency company run by billionaire Winklevoss brothers faced a serious federal lawsuit, but the Securities and Exchange Commission (SEC) decided to suspend the proceedings after Donald Trump's return to the White House. Previously, the SEC had also filed a lawsuit against Binance, the world's largest cryptocurrency exchange, but that lawsuit was completely dismissed after the new administration took office. Furthermore, after years of litigation with Ripple Labs, the new SEC is attempting to mitigate the court's penalties against the cryptocurrency company.
A New York Times investigation found that the SEC's retreat in these cases reflects a radical shift in the federal government's attitude towards the cryptocurrency industry since Trump began his second term. Never before has a regulatory agency withdrawn multiple lawsuits against the same industry on such a large scale; however, the New York Times found that when Trump returned to office, the SEC had eased its approach in over 60% of the cryptocurrency-related cases it was pursuing—either suspending proceedings, reducing penalties, or dismissing the cases altogether.
The investigation also pointed out that the withdrawal of cryptocurrency cases was particularly unusual. During Trump's presidency, the SEC withdrew a significantly higher proportion of cases related to cryptocurrency companies than cases in other industries. Although the specific circumstances of these cryptocurrency lawsuits varied, many of the companies involved shared a common thread: financial dealings with Trump, who called himself the "crypto president."
As the top federal agency regulating financial market misconduct, the SEC is no longer actively pursuing any companies known to have ties to Trump. The SEC has dropped all lawsuits against companies that have collaborated with the Trump family's cryptocurrency business or provided funding for their political activities. The agency's remaining cryptocurrency-related cases now involve defendants who are obscure entities with no apparent connection to Trump.
The SEC withdrew seven cryptocurrency cases, five of which involved companies with known ties to Trump.
• In addition, seven cryptocurrency cases have been suspended, with favorable settlements or concessions being drafted, and three of these cases involve companies with known ties to Trump;
Only nine cases remain unresolved, and none of the parties involved have any known connection to Trump.
In a statement, the SEC said it has never been politically biased in handling cryptocurrency enforcement cases, and that the shift in enforcement direction was based on legal and policy considerations, including questions about its authority to regulate the cryptocurrency industry. The SEC also stated that even before Trump supported the cryptocurrency industry, current Republican commissioners fundamentally opposed filing most cryptocurrency-related lawsuits, while emphasizing that the SEC "takes securities fraud very seriously and is committed to protecting investor rights."
There is currently no evidence that the president pressured the SEC to give special treatment to certain cryptocurrency companies. (The New York Times) also found no evidence that these companies influenced the case by providing political donations to Trump or engaging in business collaborations; some financial transactions and business collaborations even occurred after the SEC adjusted its case handling procedures.
The core issue, however, is that Trump is both a participant in the cryptocurrency industry and its top policymaker. As president, if his policies align closely with his own interests, a conflict of interest arises, and the fact that many cryptocurrency companies sued by the SEC are associated with him highlights this conflict.
At the start of Trump's second term, the White House publicly declared that the president would "stop the harsh enforcement actions and excessive regulatory measures that hinder cryptocurrency innovation." While the SEC's withdrawal of certain cryptocurrency cases had already drawn public attention, the New York Times, through analyzing thousands of court records and conducting dozens of interviews, found that the SEC's easing of cryptocurrency regulations this year far exceeded previous levels, and that Trump's allies in the cryptocurrency industry have also benefited significantly—situations that had not been fully exposed before.
All defendants involved in this investigation denied any wrongdoing, with many claiming they were only accused of procedural irregularities. Furthermore, in some cases where the SEC granted lenient treatment, the companies involved had no apparent connection to the president.
White House Press Secretary Karoline Leavitt refuted claims of a conflict of interest involving Trump and his family, stating that Trump's policies "are fulfilling the president's promise to help the United States become a global cryptocurrency hub by driving innovation, creating economic opportunities for all Americans."
The Trump administration has significantly relaxed regulations on the cryptocurrency industry, with the U.S. Department of Justice even disbanding its cryptocurrency enforcement division. The SEC's policy shift this year, however, represents a complete 180-degree turn.
An analysis by The New York Times shows that during Biden's presidency, the SEC filed an average of more than two cryptocurrency-related cases per month, with cases handled through both federal courts and the agency's internal legal system. Even during Trump's first term, the SEC averaged about one cryptocurrency-related case per month, including the high-profile Ripple lawsuit.
In stark contrast, since Trump's return to office, the SEC has not filed any cryptocurrency-related cases, while the agency still has dozens of lawsuits against other industries underway.
In a statement, Atkins said the SEC's actions were simply to correct the previous administration's overly aggressive regulatory approach to the cryptocurrency industry. He stated that the Biden administration's SEC used its enforcement power to forcefully implement new policies. He also emphasized, "I have made it clear that we will completely abandon the model of substituting enforcement for regulation."
While cryptocurrency companies are celebrating this new era, senior SEC lawyers who have led related cases are deeply concerned about the trend of deregulation. They worry that this nearly century-old institution, founded during the height of the Great Depression, whose original purpose was to protect investors and maintain market order, will be emboldened by the loosening of regulations, thereby harming consumer rights and even posing risks to the entire financial system.
Christopher E. Martin, a former senior litigation attorney at the SEC who led a lawsuit against a cryptocurrency company, retired after the SEC dropped the case this year. Speaking about the SEC's recent broad deregulation, he bluntly stated, "This is a complete compromise, practically pushing investors into a fire pit."
The end of regulatory crackdown
Late last year, regulatory action on cryptocurrencies had nearly stalled at the SEC headquarters in Washington, D.C., a building with a glass facade. Gary Gensler, the SEC chairman under Biden, had wanted to push forward with several cryptocurrency investigations, but his term was now nearing its end.
Previously, Trump had just announced the launch of a cryptocurrency project called World Liberty Financial with his family, and then successfully won re-election as president. Moreover, he had previously publicly declared that he would limit the power of the SEC.
In fact, Trump has not always supported the cryptocurrency industry. During his first term, he tweeted that cryptocurrencies were worthless and could even fuel illegal activities such as drug trafficking. The SEC at the time also adopted a tough regulatory stance, not only establishing a dedicated department to investigate online violations in the cryptocurrency sector but also filing dozens of related lawsuits.
During Biden's presidency, the SEC further intensified its regulation of cryptocurrencies. In 2022, the major cryptocurrency exchange FTX collapsed, and in the same year, the size of the SEC's cryptocurrency regulatory division nearly doubled, with its team of lawyers and industry experts expanding to approximately 50 people.
Throughout Trump's first term and under Biden's administration, the SEC has consistently maintained that since investors may be putting their life savings into the cryptocurrency space, they have the right to understand the risks involved. However, a thorny legal question has consistently plagued the SEC: Does the agency truly have the authority to bring lawsuits against the cryptocurrency industry? The answer to this question depends on whether cryptocurrencies fall under the category of securities—derivatives to modern stocks and other financial instruments.
The SEC states that many cryptocurrencies are essentially securities, therefore cryptocurrency exchanges and brokers must register with the SEC, disclose detailed information as required, and some may also be subject to independent review. Failure to fulfill registration obligations can result in legal action by the SEC under securities laws.
The cryptocurrency industry countered that most cryptocurrencies are not securities, but rather a special type of financial product that should be subject to its own regulatory rules, which the SEC has not yet established. Summer Mersinger, CEO of the Blockchain Association, stated, "We don't want to escape regulation; we just want clear and explicit rules to guide our operations."
The situation began to change in 2024 when Trump's attitude shifted from skepticism to complete endorsement of cryptocurrencies. In July of that year, he promised cryptocurrency practitioners in a speech that the "deliberate crackdown" on the industry would soon stop, and even declared that he would "fire Gary Gensler on his first day in office."
As an independent agency, the SEC has five commissioners appointed by the president, and the chairman typically aligns with the stance of the government that appointed him. Whether a case is initiated, settled, or dismissed requires a vote by the commissioners, but the actual investigation is conducted by dedicated law enforcement officers. This mechanism allows for flexible adjustments to regulatory priorities while preventing significant policy fluctuations due to sudden shifts in political climate.
However, the atmosphere at the SEC changed dramatically after Trump's second election victory. Shortly after the election, Gensler announced his resignation. What was once a highly sought-after position for career advancement in cryptocurrency regulation suddenly became a "hot potato."
According to an anonymous source, during the presidential transition, Sanjay Wadhwa, Gensler's chief of law enforcement, pleaded with law enforcement officers to "do the job that the American people are paying us to do."
However, some staff members backed down. Sources say that one executive on the cryptocurrency regulatory team took a long leave of absence for several weeks without authorization and ignored emails related to the cases; another executive refused to sign documents related to the few cryptocurrency cases filed by the SEC after the election; and some staff members simply stopped handling cryptocurrency cases altogether, completely hindering Gensler's final efforts to advance regulation.
Victor Suthammanont, who worked at the SEC for ten years and served as a law enforcement counsel for Gensler before leaving, said that during two previous administration changes, staff remained committed to their posts and performed their duties. "But this administration change is completely different; the atmosphere within the agency changed instantly," Suthammanont said, without mentioning any specific cases.
Gary Gensler announced his resignation after Trump won re-election.
After Trump's inauguration, the situation was irreversible. He first appointed SEC Republican Commissioner Mark T. Uyeda as acting chairman until his nominee, Paul S. Atkins, was confirmed by the Senate. Uyeda has long opposed the SEC's handling of cryptocurrency cases, stating in an interview with The New York Times that many of Gensler's regulatory initiatives are based on "new theories lacking support from existing laws."
Gensler expressed a completely opposite view in a speech back in 2022, stating, "Even with the emergence of new technologies, existing laws will not become invalid."
In early February 2025, Uyeda reassigned Jorge G. Tenreiro from his position as head of litigation at the SEC. Tenreiro had previously led the work of the cryptocurrency regulatory department and overseen numerous related cases; his reassignment to the information technology department was seen within the SEC as a humiliating demotion.
Following Tenreiro's departure, the SEC began to halt investigations into several cryptocurrency companies that could face lawsuits. While some investigations are still ongoing, at least 10 companies have announced they are no longer under SEC investigation, including one that just released a similar announcement last week.
There is no room for negotiation.
Uyeda soon faced an even more thorny problem: how to handle the cryptocurrency lawsuits still pending from the Biden administration. While it's common for the SEC to suspend investigations, dropping pending cases is extremely rare and requires a vote from committee members.
Coinbase, the largest cryptocurrency exchange in the United States, is being sued by the SEC for failing to fulfill its registration obligations, a high-profile case in the cryptocurrency industry. During Biden's presidency, Coinbase adopted a strong defense strategy, successfully persuading the judge to allow a higher court to review the case before trial.
Now that the SEC is under the control of the Trump administration, Coinbase is among the first companies to file for withdrawal of its case. Typically, the SEC Chairman's office does not intervene in such cases; these are handled by dedicated law enforcement personnel. However, in this case, staff from Uyeda's office participated in some of the negotiations with Coinbase, alongside the law enforcement lawyers.
Coinbase Chief Legal Officer Paul Grewal, a former federal judge, stated in an interview, "We always ensure that we keep the office of the previous chairman informed of the progress of case negotiations in a timely manner, ensuring that they are fully informed of the relevant circumstances." Uyeda stated that its staff's participation in such negotiation meetings is "entirely in accordance with regulations."
Initially, the SEC, under Uyeda's leadership, was unwilling to completely drop the case. Sources familiar with the matter revealed that the SEC's initial proposal was merely to suspend the proceedings. However, this proposal was rejected by Coinbase.
The SEC then made further concessions, proposing to withdraw the case but retaining the right to reopen it if leadership changes its mind later. However, this proposal still failed to gain Coinbase's approval. Grewal firmly stated, "Our position is very clear: either they withdraw the case completely, or we continue to defend ourselves. There is absolutely no room for negotiation."
Ultimately, the SEC chose to compromise. At that time, two Democratic commissioners, including Gensler, had already left office, leaving only two Republican commissioners and one Democratic commissioner on the SEC committee.
While Uyeda did not respond to the specific decision, he stated, "It is inappropriate to continue pursuing these types of cases, especially if the SEC may no longer recognize the underlying theories used in the proceedings in the near future."
In an interview, Caroline A. Crenshaw, the only remaining Democratic SEC commissioner, bluntly stated that the SEC's practices give the cryptocurrency industry a huge advantage, "They can do almost anything without any consequences."
Attitude change
Following the dismissal of the Coinbase case, the cryptocurrency industry widely interpreted it as a sign of compromise from the SEC. Lawyers for other cryptocurrency companies followed suit, advocating for similar outcomes for their clients. By the end of May, the SEC had dismissed six more cryptocurrency-related cases.
(The New York Times) An analysis of court records revealed this phenomenon to be highly unusual. During Biden's presidency, the SEC never proactively withdrew any cryptocurrency cases left over from Trump's first term. Only due to the death of a defendant and an unfavorable judge ruling in another case were partial withdrawals made in one and two separate cases, respectively.
After Trump began his second term, he withdrew 33% of cryptocurrency cases left over from Biden's administration, compared to only 4% for other industries.
Despite repeated commitments from the SEC to continue investigating securities fraud, it has dropped its lawsuit against Binance. Previously, the SEC accused two Binance affiliates of fraud, alleging they misled consumers regarding their measures to prevent manipulation of trading.
In addition, the SEC has applied to the court for a stay of proceedings in the fraud case against Justin Sun and the Tron Foundation he founded. There are four such cases that have been suspended pending settlement negotiations; the SEC has not yet released the outcome of this case.
The Trump administration handled a total of 23 cryptocurrency cases, 21 of which originated during Biden's presidency, and 2 were legacies of Trump's first term. The SEC has already granted lenient treatment to 14 of these cases. In 8 of these 14 cases, the companies involved had established connections with Trump and his family both before and after the cases were processed.
For example, Justin Sun reportedly spent $75 million to purchase tokens issued by World Liberty Financial. The Tron Foundation did not respond to multiple requests for comment. In court documents, Justin Sun and the Tron Foundation stated that the SEC not only lacked evidence of fraud but also had no jurisdiction to prosecute them.
Weeks before the Binance case was dropped, the company participated in a $2 billion business deal that used a stablecoin issued by World Liberty Financial. This deal was expected to generate tens of millions of dollars in revenue for the Trump family annually.
A spokesperson for World Liberty Financial stated that "the company has no affiliation with the U.S. government" and "does not have any influence on the government's policy-making and decision-making processes." Binance, in a statement, claimed that the SEC's lawsuit against it was essentially "a targeted crackdown on the cryptocurrency industry."
In March 2025, the SEC dropped its case against cryptocurrency trader Cumberland for conducting securities trading without registration. Approximately two months later, Cumberland's parent company, DRW, invested nearly $100 million in the Trump family's media company. DRW executives stated that the investment opportunity arose only after the case was dropped, and that the SEC dismissed the case simply because the allegations lacked factual basis.
Ripple, which donated nearly $5 million to Trump's inauguration, is also embroiled in litigation. During Trump's first term, the SEC accused Ripple of failing to disclose key information to investors when issuing its cryptocurrency tokens. Last year, a federal judge dismissed some of the SEC's charges but still ruled that Ripple had committed securities violations and ordered it to pay a $125 million fine.
After Trump's return to office, the SEC attempted to reduce the fine to $50 million. The judge harshly criticized the SEC's flip-flopping and rejected the request. Ripple argued to the judge that it deserved a lighter penalty, partly because the SEC had dropped several subsequent lawsuits related to similar cryptocurrency cases. Ultimately, Ripple paid the full fine. In July of this year, the Trump family's media company announced plans to include Ripple's cryptocurrency in one of its publicly traded investment funds.
Hester Peirce, a Republican commissioner at the SEC who also heads the agency's newly formed cryptocurrency task force, stated in an interview that dismissing numerous cryptocurrency cases is correcting past mistakes that should never have been brought in in the first place.
She stated, "I think the real overreaction occurred in previous years when many of the cases filed by the SEC had no legal basis whatsoever." She added that these lawsuits hindered legitimate innovation in the industry. Pierce emphasized that the cases were handled solely based on facts and specific circumstances, unrelated to "connections of the parties involved," and without any political or economic considerations.
Financially strong
In the cryptocurrency industry, few are closer to Trump than brothers Tyler and Cameron Winklevoss. The brothers founded and run the cryptocurrency company Gemini Trust. They not only fund fundraising committees supporting Trump's re-election and other Republican-affiliated organizations, but also financed the renovation of Trump's favorite White House banquet hall. Furthermore, they have provided financial backing to an upscale private club in Washington called Executive Branch, of which Trump's eldest son, Donald Trump Jr., is a shareholder.
The brothers' investment firm recently invested in a new cryptocurrency mining company called American Bitcoin. Eric Trump, Trump's second son, is the company's co-founder and chief strategy officer, while his eldest son, Donald Trump Jr., also participated in the investment.
Trump has repeatedly praised the brothers publicly, calling them "good-looking and intelligent" individuals. At a White House event, he remarked, "They're good-looking, smart, and incredibly wealthy."
However, Gemini Trust has also been embroiled in legal disputes.
In December 2020, Gemini Trust partnered with another company, Genesis Global Capital, to provide Gemini's clients with the service of lending crypto assets to Genesis, which then lends these assets to larger institutional investors.
Genesis pays interest to users and promises they can redeem their assets at any time; Gemini acts as an intermediary, earning a share of the profits. Gemini has advertised that the project can offer account holders an annualized return of up to 8%.
In an interview, San Diego data scientist Peter Chen said he had invested more than $70,000 in the Gemini project because he trusted it.
"Gemini impressed me as a company that operates in compliance with regulations and strictly adheres to rules; it is one of the most well-regulated companies in the cryptocurrency field," he recalled.
However, at the end of 2022, Genesis faced bankruptcy and froze the accounts of 230,000 customers.
A 73-year-old woman pleaded with Gemini to return her life savings of $199,000. According to lawsuit documents filed by New York State regulators, she wrote in her petition, "Without this money, I will be completely destitute."
In May 2024, Genesis reached a $2 billion settlement with New York State regulators, ultimately recovering clients' funds. Gemini also reached a settlement with New York State, pledging to pay up to $50 million if necessary to compensate clients for any remaining losses. Gemini maintained its innocence, blaming Genesis for the crisis and emphasizing that ultimately no clients suffered losses.
However, the SEC also filed lawsuits against the two companies, accusing them of issuing crypto assets without registration. Tyler Winklevoss called the lawsuits "fabricated charges" on social media.
Genesis opted for a settlement with the SEC, but Gemini insisted on defending itself until April 2025, when the SEC suddenly suspended the proceedings to allow both parties to negotiate a solution. In September of the same year, the SEC disclosed that it had reached a settlement agreement with Gemini, which is currently awaiting a vote by the committee members.
The SEC told the federal judge presiding over the case that the agreement "will completely end this litigation dispute."
