The Securities and Exchange Commission (SEC) has agreed to drop the lawsuit against cryptocurrency exchange Coinbase, signaling a retreat by federal regulators in the crypto industry. In a significant reversal after years of legal battles, the SEC accused Coinbase of selling unregistered securities that put consumers at risk. However, Coinbase announced that they had reached an agreement in principle with the SEC to withdraw the lawsuit without any financial penalty. This move would require approval from the SEC commissioners.
The dismissal of the lawsuit would be a major victory for the crypto industry, especially following President Trump’s promise to end the regulatory crackdown under the previous SEC chair, Gary Gensler. This decision was seen as a win for billionaire technology executives who supported Mr. Trump and hoped for softer regulation.
Coinbase, the largest U.S. crypto company, operates as a platform for converting dollars into digital assets like Bitcoin. The company went public in 2021 and quickly became a key target for the SEC under Gensler’s leadership. The SEC argued that virtually all cryptocurrencies are securities and should be regulated accordingly.
This legal battle is part of a broader struggle within the industry as judges issue conflicting opinions about the status of digital assets. Meanwhile, the political landscape is being reshaped with significant support for the crypto industry. Coinbase was a top funder of Fairshake, a crypto super PAC that donated millions to legislative candidates.
With the dismissal of the lawsuit against Coinbase, the crypto industry is hopeful that this decision will set a precedent for other similar cases. However, some former SEC lawyers have expressed concern about the impact of the decision on staff morale, as it is rare for the SEC to dismiss cases that have already been challenged in court.
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