Regulators Pause Probe as Tron Storms Nasdaq Amid Scrutiny

U.S. lawmakers have raised concerns over the U.S. Securities and Exchange Commission’s (SEC) handling of Tron’s initial public offering (IPO) and the regulatory environment surrounding its founder, Justin Sun. The recent Tron public listing via a reverse merger with SRM Entertainment has intensified debates over whether the SEC has adequately addressed past allegations of fraud and market manipulation against Sun. Lawmakers are now calling for a probe into the SEC’s role in facilitating Tron’s U.S. market entry amid a broader push for regulatory clarity in the crypto sector.

Tron, a blockchain platform founded by Justin Sun and based in China Hong Kong, announced in July 2025 its public listing on Nasdaq through a reverse merger with SRM Entertainment, a publicly traded toy company. This move bypassed the traditional IPO process, allowing Tron to leverage SRM’s existing public status. Following the merger, Tron’s native token, $TRX, experienced a 36.33% surge in trading volume, reaching $1.83 billion within 24 hours . However, Tron Inc.’s stock price dropped 10.68% on its first day of trading, signaling investor skepticism about the sustainability of the business model .

The SEC had previously investigated Sun and affiliated entities for alleged market manipulation and unregistered securities offerings. In February 2025, the SEC paused the investigation to explore potential settlements. This pause has allowed Tron to proceed with its U.S. market ambitions, though the investigation has not been formally closed . Lawmakers are now questioning whether the SEC’s decision to pause the investigation was influenced by broader regulatory shifts and whether it appropriately addressed the legal and financial risks associated with Tron’s operations.

Tron has positioned itself as a leading platform for stablecoin settlements, surpassing Ethereum in monthly USDT transaction processing. The platform claims to have handled over $611 billion in stablecoin settlements, reinforcing its role in the growing crypto ecosystem . The public listing of Tron Inc. has also granted the company control of over 365 million TRX tokens, valued at approximately $115 million, making it the largest public holder of the asset . This strategic move is intended to attract institutional investors by offering exposure to both blockchain innovation and traditional product lines.

The political and regulatory landscape is further complicated by Justin Sun’s ties to high-profile figures, including U.S. President Donald Trump. Tron has backed Trump-related crypto ventures, such as the $TRUMP meme coin and USD1 stablecoin . Critics argue that these connections could blur the lines between regulatory enforcement and industry influence, potentially undermining investor confidence and regulatory neutrality. Meanwhile, industry experts predict that 42% of leading CEOs will adopt blockchain technologies within two years, suggesting that regulatory clarity could accelerate broader adoption .

Despite these developments, the SEC’s regulatory approach to crypto remains in flux. In mid-2025, the Trump administration pushed through a series of legislative measures aimed at creating a clearer federal framework for digital assets. These include the GENIUS Act, which regulates stablecoins, and the CLARITY Act, which defines jurisdiction between the SEC and CFTC. These reforms are seen as critical for legitimizing crypto projects in traditional financial markets and may provide a broader pathway for other firms seeking public listings . However, gaps remain in areas such as tax policy and CBDC development, which continue to shape the regulatory environment.