SEC Drops TRON And Robinhood Investigation, Signaling Regulatory Shift

The US Securities and Exchange Commission (SEC) is deliberating its case against TRON founder Justin Sun to find a middle ground that benefits both parties and the public.

The case, filed in March 2023, accused Sun of illegally distributing Tronix (TRX) and BitTorrent (BTT) while inflating the TRX trading volume.

On 26 February 2025, attorneys for Sun and the SEC requested a 60-day pause in the case in a letter sent to US District Judge Edgardo Ramos.

The Gary Gensler led SEC accused Sun of selling TRX and BTT tokens as unregistered investments through bounty programs.

Furthermore, the SEC accused Sun of wash trading TRX from April 2018 to February 2019 by orchestrating over 600,000 trades, using two trading accounts to fabricate market activity. Sun’s employees executed these trades with 4.5 million to 7.4 million TRX daily. Sun also allegedly provided a significant supply of TRX and made $31 million from selling TRX in the secondary market.

Finally, the SEC also accused Sun of hiring several high-profile celebrities to push TRX without disclosing compensation. The agency charged eight celebrities, including Lindsay Lohan, Akon, and Austin Mahone, for promoting TRX and/or BTT without disclosing payments received.

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SEC Concludes Probe Into Robinhood’s Transactions

The stay in TRON’s case comes in as the SEC officially concluded its investigation into Robinhood’s crypto activities as well. The regulatory agency has not taken any enforcement action against the fintech company.

On 24 February 2025, Robinhood revealed that the SEC’s Enforcement Division had dropped its probe into the alleged violations of security laws following the May 2024 Wells Notice.

The crypto community closely monitored the result of this investigation after it went viral. Over the last ten months, it has been hotly debated whether crypto traded on the Robinhood platform should be considered securities and subjected to a stricter regulatory oversight under the Securities Exchange Act of 1934.

Following strict due diligence, Robinhood has gone public with only 18 tokens, which may seem small when compared to other exchanges. However, it lowers Robinhood’s risk of potentially opening itself to regulatory criticism.

The company was confident that the SEC would eventually drop its probe into its crypto transactions due to their prior due diligence.

Dan Gallagher, Chief Legal, Compliance, and Corporate Affairs Officer at Robinhood said, “Let me be crystal clear—this investigation never should have been opened. Robinhood Crypto always has and will always respect federal securities laws and never allow transactions in securities.”

Recently, the company saw robust growth in 2024. Reportedly, the company’s net revenue climbed 115% year over year to $1.01 billion. Its revenues based on transactions, especially in the crypto sector, also increased substantially to $358 million, an increase of more than 700%.

Positive numbers reported by Robinhood have cemented the company’s position in the market and strengthened investor confidence. With the SEC probe now concluded, Robinhood is positioned to expand its crypto offerings to those willing to invest in the platform.

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Shift In Regulatory Approach – Is This the Trump Effect?

SEC’s move to end its probe into Robinhood’s crypto business seems to be a part of a wider trend of relaxing crypto regulations under the current regime in the US. After President Trump re-elected him, the SEC acting chair, Mark Uyeda, has taken a softer approach towards the crypto sector.

Uyeda has recently relaunched the crypto task force, appointing Commissioner Hester Pierce to lead and set objectives. Other agencies, like the Commodity Futures Trading Commission (CFTC) and the Office of Comptroller of the Currency (OCC), have yet to take similar steps.

The President, however, recently nominated Brian Quintenz to head the CFTC and Jonnathan Gould to lead the OCC. Both the nominees have extensive crypto experience.

This broader trend suggests a shift from the hardline enforcement policies of the last administration. The market participants have greeted the trend favorably. The US crypto landscape is set to implement more forward-looking regulatory policies for the digital asset and Web3 industry.

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