SEC staff agrees in principle to dismiss Coinbase enforcement case, pending Commissioner approval
End of lawsuit may pivot crypto regulation focus from SEC battles to legislative discussions in Congress.
Key Takeaways
- The SEC is likely to drop its big lawsuit against Coinbase, which could be a major victory for the crypto industry.
- Dismissing the lawsuit may shift focus from legal battles to establishing crypto standards in Congress.
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The SEC staff has agreed in principle to dismiss its enforcement case against Coinbase, pending Commissioner approval, Coinbase shared in a Friday blog post. The case will reach a final resolution once the SEC Commissioners give their approval to the staff’s recommendation to dismiss the case.
The commission, currently including Acting Chairman Mark Uyeda, Commissioners Hester Peirce and Caroline Crenshaw, is set to decide whether to accept the deal negotiated by its staff to drop the case. The enforcement meetings typically happen on Thursday, though there’s no set date for this particular vote. The final decision could take up to a week.
The dismissal would be “with prejudice,” meaning the SEC cannot bring the same charges against Coinbase again. If the SEC drops this case, it will likely impact other similar cases against crypto exchanges. The SEC vs. Coinbase case could set a precedent and lead to their dismissal as well.
The SEC sued the Wilmington-based firm in June 2023, shortly after targeting one of its biggest competitors, Binance, in a separate enforcement action. Coinbase was accused of operating an unregistered securities exchange, acting as an unregistered broker and clearing agency.
The SEC also alleged that its staking-as-a-service program constitutes an unregistered securities offering. The complaint asserted that Coinbase facilitated the trading of at least 13 crypto tokens that the SEC considered to be securities.
Throughout their legal proceedings, Coinbase has consistently denied the SEC’s allegations and argued for clearer regulatory guidelines for the crypto industry.
The latest development follows the SEC’s recent request for a 28-day extension to prepare its response to Coinbase’s appeal amid an ongoing legal battle on the classification of digital assets. The securities agency, under the leadership of Acting Chair Uyeda, has already made several changes, including the formation of the SEC’s Crypto Task Force which might play a role in resolving the lawsuit against Coinbase.
Back to building innovative tech: Coinbase’s chief legal officer
“Today we can announce upon full Commission approval the SEC is dropping our case. There will be no settlement or compromise– a wrong will simply be made right,” said the company’s chief legal officer Paul Grewal in a recent statement.
The agency has recently shifted its enforcement focus, moving its crypto unit to broader “emerging technologies” oversight. It also dropped its appeal regarding crypto dealer registration rules and requested a pause in its enforcement dispute with Binance.
“Now the US can finally get back to doing what it does best: building innovative tech that improves the world,” Grewal stated.
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