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Crypto World

SEC’s Atkins Grilled on Crypto Enforcement Pullback as Justin Sun Case Draws Congressional Scrutiny

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21Shares Introduces JitoSOL ETP to Offer Staking Rewards via Solana

TLDR:

  • SEC paused Justin Sun’s wash trading case in 2023 while exploring resolution, raising conflict concerns over Trump ties 
  • Atkins offered lawmakers confidential briefing on Sun case but cited regulatory restrictions on public discussions 
  • SEC dropped major enforcement actions against Binance, Ripple, Coinbase, rejecting previous regulation-by-enforcement approach 
  • Atkins confirmed SEC and CFTC are developing joint crypto rules aligned with House-passed Clarity Act framework

 

SEC Chairman Paul Atkins faced intense scrutiny from House lawmakers regarding the agency’s shift in cryptocurrency enforcement policies.

During Wednesday’s oversight hearing before the House Financial Services Committee, Democrats questioned the regulatory pullback on major crypto cases, particularly involving Tron founder Justin Sun.

Atkins defended the agency’s new direction while promising clearer regulations for the digital asset industry through collaboration with the CFTC.

Sun Case Raises Questions About Enforcement Priorities

Representative Maxine Waters, the committee’s ranking Democrat, pressed Atkins on the agency’s handling of the Justin Sun investigation.

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The SEC had accused Sun in 2023 of orchestrating wash trading schemes involving over 600,000 fraudulent transactions to inflate TRX token volumes. However, the agency paused the case last year while exploring potential resolution options.

Waters highlighted Sun’s connections to President Trump’s family through World Liberty Financial Inc. “Well, while you were exploring a potential resolution, Mr. Sun has been busy ingratiating himself within Trump’s orbit,” Waters said to Atkins during the hearing.

She questioned whether these ties influenced the SEC’s decision to halt enforcement actions. The California lawmaker also referenced recent allegations from Sun’s former girlfriend suggesting evidence of TRX manipulation.

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Atkins responded that regulatory restrictions prevented him from discussing specific cases publicly. He offered lawmakers a confidential briefing on the matter, stating he was willing to have further conversations “to the extent the rules allow me to do that.”

Waters pressed further, asking whether the SEC’s focus on real fraud extended to crypto markets. “Whatever involves securities,” Atkins responded.

The agency dropped several high-profile enforcement actions last year against major crypto firms including Binance, Ripple, Coinbase, Kraken, and Robinhood.

SEC leadership criticized the previous administration’s regulation-by-enforcement approach. When asked about protecting investors versus Trump business interests, Atkins stated, “As far as what the Trump family does or not, I can’t speak to that.”

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Regulatory Clarity Takes Center Stage

Republican committee members shifted focus toward Atkins’ plans for establishing comprehensive crypto regulations.

The chairman outlined ongoing coordination with the Commodity Futures Trading Commission to develop clear operational guidelines for digital asset companies.

These efforts align with the Clarity Act passed by the House, though the legislation’s Senate fate remains uncertain.

Atkins explained that both agencies are working on rules “consistent with what’s in the Clarity Act that you all passed here in the House, and hopefully what will come out of the joint work that you’re doing with the Senate.”

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He added that this effort would help provide certainty regarding jurisdictional boundaries between the two agencies. The framework would establish which types of digital assets fall under SEC or CFTC oversight.

The CFTC recently updated its guidance on stablecoins, allowing national trust banks to issue payment stablecoins and expanding eligible tokenized collateral.

Meanwhile, the National Credit Union Administration proposed rules for credit unions seeking stablecoin issuer status.

These moves implement provisions from last year’s GENIUS Act, marking the crypto sector’s first major legislative achievement.

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A policy race now develops between Atkins’ SEC and Senate lawmakers working on comprehensive crypto legislation.

Recent Senate delays may allow the SEC to lead in establishing digital asset regulations. The industry watches closely as regulatory frameworks take shape across multiple federal agencies.

 

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Crypto World

Drift Protocol Warns of Potential Cybersecurity Exploit

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Cybercrime, Cybersecurity, Hacks, Decentralized Exchange

Drift Protocol, a decentralized cryptocurrency exchange (DEX), detected “unusual” trading activity on the platform on Wednesday, warning users not to deposit funds until the issue has been resolved.

The Drift team did not disclose the specific cause of the ongoing incident or the damage in its initial announcement and is currently investigating the issue. 

In a subsequent update, the Drift team announced that deposits and withdrawals on the platform have been suspended. 

Cybercrime, Cybersecurity, Hacks, Decentralized Exchange
Source: Drift Protocol

Blockchain cybersecurity threat researcher Vladimir S said the exploit was likely due to a crypto wallet private key leak, and the total funds lost in the incident could be as high as $200 million. 

“Admin signer was compromised, or whoever controls it intentionally executed these changes,” he said

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The stolen assets include wrapped versions of Bitcoin (BTC), Jito (JTO), the Fartcoin (FRT) memecoin, other altcoins, and various dollar, euro, and Japanese yen stablecoins, which have since been transferred to multiple wallets, according to Vladimir S.

Cybercrime, Cybersecurity, Hacks, Decentralized Exchange
Source: Vladimir S

The exploiter started converting the stolen assets to the USDC (USDC) stablecoin, bridging the funds to the Ethereum network and purchasing Ether (ETH), according to Solana treasury company DeFi Development Corp.

Cointelegraph reached out to Drift Protocol but did not receive an immediate response by the time of publication. 

Cybersecurity exploits and hacks were responsible for $49 million in crypto losses during February, a sharp decrease from January, but a reflection of the ongoing security threats users and platforms face.

Related: Resolv temporarily halts protocol to ‘contain the impact’ of 80M USR exploit

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Drift token impacted by the exploit

The price of the Drift (DRIFT) token briefly reached $0.68 on Wednesday, but fell by about 18% following news of the exploit, according to data from CoinMarketCap.

Cybercrime, Cybersecurity, Hacks, Decentralized Exchange
Drift token falls after news of the exploit. Source: CoinMarketCap

About 83% of the native crypto tokens of hacked platforms never recover to pre-hack prices, according to blockchain security company Immunefi. 

“The stolen funds are only the first layer of damage,” Immunefi CEO Mitchell Amador told Cointelegraph in March.

“What follows is often more destructive: sustained token price suppression, reduced treasury capacity, leadership disruption, lost development time, and erosion of user trust,” he added. 

Magazine: WazirX hackers prepped 8 days before attack, swindlers fake fiat for USDT: Asia Express

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