Attorneys for the federal government alleged that Coinbase makes billions by making it easier for consumers to trade cryptocurrencies—but failed to provide its own investors with strong protections. Coinbase had, for instance, allegedly continued to operate as an unregistered exchange even after warning investors of the risk of regulatory action.
Cryptocurrency exchange Coinbase has announced that the U.S. Securities and Exchange Commission will drop a lawsuit currently pending against the company.
According to The New York Times, Coinbase has acknowledged the proposed settlement both on its website and in court filings. If approved, the U.S. Securities and Exchange Commission would withdraw all claims against Coinbase without levying any financial penalty.
The SEC filed its lawsuit against Coinbase in 2023. In its original complaint, the Commission argued that the cryptocurrencies traded on Coinbase constitute a form of unregistered securities.
“Coinbase has elevated its interest in increasing its profits over investors’ interests, and over compliance with the law and the regulatory framework that governs the sec markets and was created to protect investors and the US capital markets,” the SEC said in its lawsuit.
Attorneys for the federal government alleged that Coinbase makes billions by making it easier for consumers to trade cryptocurrencies—but failed to provide its own investors with strong protections. Coinbase had, for instance, allegedly continued to operate as an unregistered exchange even after warning investors of the risk of regulatory action.
Coinbase is now touting the settlement as “nothing short of a complete win.” Paul Grewal, Coinbase’s chief legal officer, told The New York Times in an interview that the company will not have to admit wrongdoing or pay a fine. Furthermore, the SEC agreed to dismiss the case with prejudice—meaning that it cannot be filed again.
“The case goes away as if it had never been filed,” Grewal told the Times.
Grewal said that proposed settlement has “the full support of leadership” at the Securities and Exchange Commission; he expects that the agency will undertake a formal vote to approve the deal sometime next week.
“Our ending this case on such stark terms with the SEC surrendering offers a model and template,” Grewal said. “I’m hopeful that ours will be not the last but rather the first of these cases to fall.”
Brian Armstrong, the company’s CEO, has since posited the lawsuit as a relic of the Biden administration.
“I think it is a really important signal that a small group of activists in the prior administration who tried to unlawfully attack this industry—we were able to turn page on that and finally get regulatory clarity in America,” Armstrong said.
The Securities and Exchange Commission is continuing to litigate claims against two other cryptocurrency exchanges: Binace, and Kraken.
Sources
Coinbase Says S.E.C. Will Drop Crypto Lawsuit
SEC dropping crypto lawsuit, Coinbase says
US securities regulator to drop lawsuit against Coinbase, firm says
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