The Securities and Exchange Commission has agreed to dismiss its case against cryptocurrency exchange platform Coinbase, signaling a shift toward federal deregulation and a key victory for the crypto industry since President Trump took office.
According to The New York Times, Coinbase said it had reached an agreement with the SEC to drop the lawsuit without financial penalty, describing the decision as “righting a major wrong” in a statement on its website.
“We’ve always maintained that we were right on the facts and the law, and today’s announcement confirms that this case should never have been filed in the first place,” Paul Grewal, Coinbase’s chief legal officer, said in the statement. “This is a victory not just for Coinbase, but for our customers, the United States, and individual freedom.”
The SEC sued Coinbase in 2023 for offering unregistered securities — assets that are not registered with the SEC — which have fewer investor protections and could put consumers at risk. Coinbase said the lawsuit was politically motivated by the Biden administration, which took a more aggressive approach to regulating crypto.
“To ensure innovation continues in America and a rogue regulator cannot weaponize the lack of clarity again, it is critical that we pass legislation which provides the long-term certainty needed for the US to lead in this industry,” Grewal said. Coinbase announced in late January that Trump's 2024 campaign manager Chris LaCivita and former Arizona Sen. Kyrsten Sinema will serve as advisers on its Global Advisory Council.
Trump, who said in his first administration that crypto's "value is highly volatile and based on thin air," reversed course last year and portrayed himself as the savior of an industry the Biden administration had cracked down on. Crypto donors spent over $130 million on Trump and other pro-crypto candidates' campaigns.
Shortly after taking office, Trump signed an executive order to promote the development of crypto and on Sunday announced a federal crypto reserve for the government to purchase and hold digital assets. His nomination of crypto advocate Paul Atkins as SEC chair sent bitcoin prices soaring.
The Trumps' investments in crypto have raised conflict of interest concerns. Trump and his sons are promoters of World Liberty Financial, a crypto trading business they started last fall with Steve Witkoff, a co-chair of Trump's inaugural committee and Middle East envoy. The Trumps are not owners or employees of the platform but can receive a cut of the sales of its cryptocurrency.
Days before his inauguration, Trump and wife Melania launched their own meme coins. The highly volatile digital currencies generated billions of dollars for the president, at least on paper, and prompted criticism from some in the crypto community who viewed them as a gimmick. The SEC said last week that meme coins are more like collectibles than securities, and won't face regulatory oversight.
Trump's social media company might need approval from his administration as it launches a financial services firm. Some of its financial products, such as bitcoin ETFs, need approval from the SEC before they can be created, listed and traded.
Trump said he will host a "Crypto Summit" at the White House on Friday for industry leaders. The summit will be chaired by David Sacks, a venture capitalist Trump has named "crypto czar."
If the Coinbase case is dropped, after having previously been denied dismissal by a judge, it would represent a major shift from the SEC’s usual approach. The agency also recently moved to dismiss a civil fraud case against Justin Sun, a crypto entrepreneur who invested millions in Trump's World Liberty Financial and is an adviser to the business.
John Reed Stark, a former SEC enforcement official, said the SEC's new approach has affected morale.
“This radical turnabout has never occurred,” Stark told The Times. “They have already cut the crypto unit in half. Every single person who has worked in this group is absolutely devastated.”
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