Coinbase announced that staff from the U.S. Securities and Exchange Commission (SEC) have agreed to drop the agency’s high-profile lawsuit against the cryptocurrency exchange. The decision marks a shift in the regulatory landscape for digital assets under Donald Trump’s presidency.
According to Coinbase’s statement on Friday, SEC staff have “agreed in principle” to dismiss the case, which accused the company of violating U.S. securities laws. The agreement is pending approval from the SEC commissioners.
“This is a victory not just for Coinbase, but for our customers, the United States, and individual freedom,” the company stated.
Following the announcement, Coinbase shares initially rose by 4.4% after the stock market opened on Friday but later dropped by 5.2% during midday trading.
The SEC filed the lawsuit against Coinbase in June 2023, alleging that the company operated as an unregistered national securities exchange, broker, and clearing agency. This legal action was part of a broader crackdown on the cryptocurrency industry, which also included allegations against Binance for offering unregistered securities and operating without proper registration.
Coinbase criticized what it described as the SEC’s “war against crypto,” asserting that the lawsuit stemmed from a change in “political leadership” at the agency following the company’s public listing in 2021.
The decision to drop the lawsuit would represent a departure from the regulatory approach of Gary Gensler, the former SEC chair appointed by President Joe Biden. Gensler had characterized the crypto industry as a “Wild West” prone to fraud and misconduct. Under his leadership, the SEC pursued enforcement actions against crypto companies for failing to register digital assets and for defrauding investors.
Earlier this month, Trump signed an executive order aimed at increasing presidential oversight of independent federal agencies, including the SEC. The order requires agencies to submit draft regulations for review, signaling a potential shift toward a more business-friendly regulatory environment.
Trump, during his presidential campaign, expressed support for the cryptocurrency industry and nominated Paul Atkins, a known crypto advocate, to lead the SEC. In a 2023 podcast, Atkins emphasized that the SEC should focus on facilitating lawful activity and fostering competitive markets to reduce costs for investors and capital seekers.
“While dismissal will be a major win for the rule of law — and a clear vindication of our position — most of all it will be a win for the entire industry and the 52 million Americans who have owned a digital asset,” Coinbase stated.
The SEC declined to comment on the matter.
