- The SEC has officially dismissed its lawsuit against Coinbase with prejudice
- The lawsuit, filed in 2023, alleged Coinbase violated securities laws by trading crypto tokens that should have been registered as securities
- The dismissal comes as part of a shift in regulatory approach under President Trump’s administration
- A similar case against Binance has been paused, and the SEC has also ended its case against MetaMask
- The SEC has established a new Crypto Task Force to develop crypto policy in a more transparent manner
The U.S. Securities and Exchange Commission (SEC) has officially dismissed its lawsuit against Coinbase, the largest cryptocurrency exchange in the United States.
The dismissal, filed on Thursday with the Southern District of New York, ends a legal battle that began in 2023 when the SEC sued Coinbase for allegedly violating federal securities laws.
The case was dismissed “with prejudice,” which means it cannot be refiled in the future. This decision marks a major change in how the government plans to handle crypto regulation under President Donald Trump’s administration.
Securities Law
The SEC had claimed that Coinbase broke the rules by allowing trading of at least 13 crypto tokens that should have been registered as securities. They also took issue with Coinbase’s “staking” program, where users pool assets to verify blockchain activity in exchange for rewards.
Coinbase had strongly disagreed with these claims. The company argued that crypto assets do not meet the definition of investment contracts under U.S. law, unlike stocks and bonds.
This position is widely held throughout the crypto industry. The key test for whether something is a security comes from a U.S. Supreme Court case, which asks if people are investing in a common enterprise expecting to make a profit.
The dismissal comes shortly after Coinbase announced last week that the SEC planned to withdraw the case. Chief Legal Officer Paul Grewal called the move “righting a major wrong” for one of the largest crypto companies in the U.S.
The SEC’s lawsuit was filed two years after Coinbase went public. At that time, the agency claimed Coinbase had merged three functions that are typically kept separate: brokers, exchanges, and clearing agencies.
The SEC stated back then:
“Coinbase has never registered with the SEC as a broker, national securities exchange, or clearing agency, thus evading the disclosure regime that Congress has established for our securities markets.”
The agency has also paused its similar lawsuit against Binance, another major cryptocurrency exchange. This pause came after a joint request, citing the implications of the SEC’s new crypto task force.
In a similar move, Consensys founder Joseph Lubin announced on Thursday that the SEC had agreed “in principle” to end its case against MetaMask, a popular crypto wallet developed by Consensys.
These changes come as Republican officials at the SEC have begun to overhaul the agency’s crypto policies. This process started even before the arrival of Paul Atkins, President Trump’s pick for SEC chair, who is known to be friendly toward cryptocurrencies.
Acting SEC Chairman Mark T. Uyeda explained the new approach:
“For the last several years, the Commission’s views on crypto have been largely expressed through enforcement actions without engaging the general public. It’s time for the Commission to rectify its approach and develop crypto policy in a more transparent manner. The Crypto Task Force is designed to do just that.”
Many legal experts had expected the SEC to seek settlements in cases where companies violated SEC rules but weren’t accused of defrauding investors. However, they told Reuters that a mass dismissal of all pending matters would be unusual.
According to court documents, all defendants in the Coinbase case have been discharged without costs under Rule 41(a)(1)(A)(ii) of the Federal Rules of Civil Procedure.
President Trump has been reshaping the government to be more supportive of cryptocurrencies during the early part of his presidency. The dismissal of the Coinbase lawsuit appears to be part of this broader shift in regulatory stance.
