Coinbase announced that staff at the U.S. Securities and Exchange Commission (SEC) have agreed to dismiss a significant lawsuit against the cryptocurrency exchange. This move indicates a potentially more favorable stance toward digital assets during Donald Trump’s presidency.
The SEC staff have agreed in principle to drop the case, which accused Coinbase of breaching U.S. securities law, pending approval from the commission, according to a statement from Coinbase. The exchange described the decision as a victory for itself, its customers, the United States, and individual freedom.
Following this announcement, Coinbase’s shares initially surged by as much as 4.4% after the opening bell on Wall Street, but eventually closed 8.3% lower in line with a broader market downturn.
The SEC had filed a lawsuit against Coinbase in June 2023, alleging the company violated securities laws by failing to register as a national securities exchange, broker, or clearing agency. This action was part of a larger regulatory campaign against the cryptocurrency sector, during which the SEC also accused Binance of dealing in unregistered securities and operating without proper registration.
In its statement, Coinbase criticized the SEC’s approach as a “war against crypto,” suggesting that the decision to litigate against them came two years after their 2021 public listing due to changes in the agency’s political leadership.
The possible dismissal of the lawsuit represents a shift from the SEC’s previous stance under former Chair Gary Gensler, an appointee of former President Joe Biden. Gensler characterized the crypto industry as a “Wild West” filled with fraud and had initiated a vigorous enforcement campaign targeting various forms of alleged misconduct within the sector.
Recently, Trump signed an executive order aimed at increasing his influence over independent federal agencies, including the SEC, mandating them to submit draft regulations for review. On the campaign trail, Trump expressed support for the cryptocurrency industry and nominated crypto proponent Paul Atkins to lead the SEC. Atkins has stated that the SEC should facilitate non-criminal activity in the sector and enable markets to grow, as this can reduce costs for investors and those raising capital.
Coinbase remarked that the dismissal of the lawsuit would be a significant triumph for the rule of law and a vindication of their position, benefiting the entire industry and the 52 million Americans who have owned digital assets. The SEC chose not to comment on the matter.