On Friday, Coinbase announced that the Securities and Exchange Commission (SEC) has agreed to dismiss the lawsuit against the company with prejudice, preventing the case from being refiled.
This decision, pending the approval of the SEC’s Commissioners, suggests that the current administration intends to adopt a more favorable stance toward cryptocurrency than the SEC’s former leadership under Gary Gensler.
The SEC’s lawsuit, which was initiated in 2023, claimed that crypto assets were securities and that Coinbase was functioning as “an unregistered national securities exchange, broker, and clearing agency.”
In response, Coinbase contended that the SEC had not provided sufficiently clear regulations regarding cryptocurrencies, making it unjustifiable to initiate legal action for alleged violations.
Brian Armstrong, Coinbase’s CEO, recounted in a video posted on X that many advisors in 2023 recommended against legal confrontation with the SEC due to potential expenses of tens of millions of dollars. He suggested that the SEC’s motivations and strategies played a role in the legal actions.
Armstrong expressed that his motivation for opposing the SEC was to protect the crypto industry in the United States. He noted that not many companies had the financial resources Coinbase possessed, revealing that Coinbase ultimately spent $50 million defending the case, confirming predictions about the costliness of the defense.
A spokesperson for Coinbase clarified that this $50 million was solely comprised of external legal fees, excluding any employee time.
Despite what appears to be a legal win for Coinbase, Armstrong emphasized the importance of advancing legislation for crypto to establish beneficial regulations within the United States, cautioning that failure to do so could result in being outpaced by other countries.