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Coinbase has said the US securities regulator’s staff have agreed to drop the agency’s landmark lawsuit against the cryptocurrency exchange, in a move that signals a friendlier approach towards digital assets under Donald Trump’s presidency.
Securities and Exchange Commission staff have “agreed in principle” to dismiss the case, which alleged the crypto company had violated US securities law. The decision is “subject to commissioner approval”, Coinbase said in its statement on Friday.
“This is a victory not just for Coinbase, but for our customers, the United States, and individual freedom,” the crypto exchange said.
Coinbase shares rose as much as 4.4 per cent shortly after Wall Street’s opening bell on Friday, but swung to close 8.3 per cent lower alongside a broader market sell-off.
The SEC sued Coinbase in June 2023, alleging it had violated US securities law because it did not register as a national securities exchange, broker or clearing agency. The move was part of a broader regulatory crackdown on the crypto market, which also involved the agency accusing Binance of offering unregistered securities and operating as an unregistered venue.
Coinbase criticised the SEC’s “war against crypto”, claiming in its Friday statement that the commission’s decision to sue the exchange two years after it went public in 2021 was due to a change in “political leadership” at the agency.
Scrapping the lawsuit would mark an about-turn for the SEC from its stance under Gary Gensler, the agency’s former chair appointed by ex-president Joe Biden.
Gensler branded the crypto sector a “Wild West” “rife with fraud”. He unleashed an enforcement crackdown against crypto players, alleging misconduct that ranged from failures to register digital assets properly to defrauding investors.
Trump this month moved to strengthen his control over independent federal agencies including the SEC, by signing an executive order that orders them to send draft regulations for review.
Trump on the presidential campaign trail proclaimed his support for the cryptocurrency industry, and has nominated crypto advocate Paul Atkins to head the SEC.
In reference to digital assets, Atkins said in a 2023 podcast that the SEC “should be there with its ear to the ground to . . . accommodate activity that’s not criminal and then enable markets to flourish, because if it challenges incumbents and it helps to bring down costs for investors and for people who are trying to raise capital, I mean that’s the reason why we have financial markets”.
“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 said.
The SEC declined to comment.
