In what appears to be the latest example of the dramatic shift in U.S. cryptocurrency regulation under the Trump administration, the Securities and Exchange Commission (SEC) and crypto entrepreneur Justin Sun have jointly requested a pause in their ongoing legal battle. This development follows a pattern of regulatory easing that has emerged since President Trump’s inauguration last month.
The Joint Motion
According to a February 26 filing in a Manhattan federal court, lawyers for both Sun and the SEC are seeking a stay in the regulatory proceedings to explore potential settlement options. The filing states that “the Parties submit that it is in each of their interests to stay this matter while they consider a potential resolution and agree that no party or non-party would be prejudiced by a stay.”
If approved, the motion would give the parties 60 days to submit a joint status report on their progress toward resolution. Both Sun and the SEC have declined to comment on the specifics of any potential settlement.
The Original Case
The SEC sued Sun and three of his companies in March 2023 under former Chair Gary Gensler’s leadership. The regulator alleged that Sun worked with companies under his control—the Tron Foundation, BitTorrent Foundation Ltd., and Rainberry Inc.—to engineer the offer and sale of unregistered securities.
Sun had previously attempted to dismiss the lawsuit, arguing that the SEC lacked jurisdiction as the token sales involved “predominantly foreign conduct.” The SEC countered that Sun’s extensive travel throughout the United States gave them proper jurisdiction over the matter.
Part of a Broader Pattern
This pause request mirrors similar actions in other high-profile crypto cases, particularly the recent stay in proceedings against Binance Holdings Ltd. Under acting SEC Chair Mark Uyeda, the regulatory landscape has shifted dramatically, with the agency:
- Closing its investigation into Robinhood Markets Inc.’s crypto operations
- Ending probes into decentralized finance firm Uniswap
- Terminating an investigation into NFT marketplace OpenSea
- Agreeing to drop its lawsuit against Coinbase Global Inc., pending commissioner approval
The day after Trump’s inauguration, Uyeda announced the formation of a crypto-focused task force—separate from the enforcement division—aimed at creating a “comprehensive and clear” framework for market regulation. This initiative, dubbed “Crypto 2.0,” stands in stark contrast to the dozens of penalties and lawsuits brought against crypto companies under Gensler’s leadership.
The Trump Connection
Sun’s relationship with the Trump administration has raised eyebrows in some quarters. He has invested $75 million in World Liberty Financial, one of Trump’s crypto projects. According to the terms of this project, 75% of token sale proceeds—approximately $56 million—are directed to the Trumps as a fee.
Critics like Corey Frayer, director of investor protection at the Consumer Federation of America and former senior adviser to Gary Gensler on crypto issues, have expressed concern about the implications: “The fact that they’re not even pursuing fraud charges anymore, especially with someone like Justin Sun, demonstrates that the politicization of the agency is already paying off for Trump’s business associates.”
Sun’s Public Profile
Beyond his crypto ventures and legal challenges, Sun has maintained a high public profile. He recently made headlines for purchasing a controversial artwork by Maurizio Cattelan—a banana taped to a wall with duct tape—for $6.2 million.
Last week, Sun appeared at the Consensus crypto conference in Hong Kong, where he participated in a panel alongside Zak Folkman, a co-founder of the Trump crypto project. During the panel, Sun remarked on the changing regulatory environment: “Everything has changed dramatically since last year.”
What’s Next?
If the court approves the stay, the SEC and Sun will have 60 days to work toward a resolution. This case could serve as a bellwether for other ongoing crypto enforcement actions, particularly those involving Kraken and Ripple, which face court deadlines in late March and mid-April, respectively.
The outcome will likely provide further insight into how crypto regulation will unfold under the Trump administration, which campaigned on a promise to make the United States “the crypto capital of the planet.”
As the regulatory landscape continues to evolve, industry participants and observers alike will be watching closely to see whether these changes represent a temporary political shift or the beginning of a more permanent regulatory framework for digital assets in the United States. Check cryptonewstoday for latest updates on crypto news
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