Coinbase Clears Legal Hurdle as SEC Drops High-Profile Lawsuit

The Securities and Exchange Commission (SEC) has dropped its civil enforcement case against Coinbase Inc. and Coinbase Global Inc.

According to the February 27 press release, the SEC and Coinbase filed a joint stipulation, effectively ending years of contentious litigation.

Coinbase SEC Lawsuit Comes to an End

The SEC initiated a case against Coinbase in June 2023. The regulator accused the exchange of violating agency rules by facilitating trading in several crypto tokens that it claimed should have been registered as securities. 

Coinbase CEO Brian Armstrong described the legal battle as costing “millions of taxpayer dollars” and causing “irreparable harm” to the industry. The battle has now concluded with a full dismissal. 

According to Armstrong’s statement, the agreement with SEC staff involved no fines or changes to Coinbase’s business model. 

The dismissal of the Coinbase case comes amid a broader shift in the SEC’s strategy toward crypto regulation. Acting Chairman Mark Uyeda pointed out that, for years, the Commission has focused on enforcement actions to communicate its stance on crypto. It has not engaged the public in the process.

“It’s time for the Commission to rectify its approach and develop crypto policy in a more transparent manner,” Uyeda stated.

Uyeda pointed to the newly established crypto task force as a step in the right direction. Last month, the SEC revealed the formation of a new crypto task force under the leadership of Commissioner Hester Peirce. The task force aims to address the long-standing uncertainties surrounding the regulatory classification of digital assets.

Meanwhile, the industry has reacted positively to the dismissal of the Coinbase case.

“SEC is working overtime with all of their moves over the last few weeks. Genuinely impressive. Really did not expect things to be moving this fast or unwinding this fast,” Bloomberg’s ETF analyst James Seyffart posted on X.

The dismissal marks the latest in a string of SEC retreats from high-profile crypto cases. Over the past few days, enforcement actions against Uniswap, OpenSea, Consensys, and Gemini have also been dropped.

Emilie Choi, Coinbase’s Chief Operating Officer, celebrated the outcome on X. She expressed satisfaction with being on the “right side of history.” 

“We’ve won the battle, now let’s win the war: pro-innovation legislation that delivers industry certainty for the long term,” Choi added.

While this marks a significant victory for Coinbase and the crypto industry, all eyes are now on the SEC’s ongoing lawsuit against Ripple. The case has been ongoing for years and remains unresolved. 

However, the SEC’s recent actions do not necessarily indicate an impending resolution for Ripple.

“The Commission’s decision to seek dismissal of this litigation does not reflect the Commission’s position on any other case,” the joint stipulation clarified.

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