- SEC drops Coinbase lawsuit, signaling pro-crypto shift under Trump, boosting industry optimism.
- Coinbase triumphs over regulatory overreach, ending 2023 enforcement battle, no fines imposed.
Coinbase, announced on February 21, 2025, that the U.S. Securities and Exchange Commission (SEC) has agreed to dismiss its lawsuit against the company. The announcement, made by Paul Grewal, Chief Legal Officer at Coinbase, via a series of posts on X, marks the end of a contentious legal battle that had implications for the broader crypto sector.
The Announcement: “Case Dismissed”
In his initial post on X, Grewal shared the two words every defendant hopes to hear: “Case dismissed.” He elaborated that, pending full Commission approval, the SEC would drop its case against Coinbase without any settlement or compromise, effectively righting what Coinbase views as a wrongful action. This decision, Grewal emphasized, signals a victory for the company and the crypto industry at large.
"Case dismissed." Two words that every defendant in every case yearns to hear. Today we can announce upon full Commission approval @SECGov is dropping our case. There will be no settlement or compromise– a wrong will simply be made right. 1/4
— paulgrewal.eth (@iampaulgrewal) February 21, 2025
In subsequent posts, Grewal outlined Coinbase’s ongoing commitment to advocating for legislative clarity to prevent similar regulatory overreach in the future. He highlighted the critical role of collaboration with Congress and SEC staff to establish clear rules that would allow the crypto industry to thrive in the United States.
Grewal also extended gratitude to Coinbase’s legal team, including lawyers from Wachtell and Sullivan & Cromwell, as well as Coinbase’s leadership, including CEO Brian Armstrong and Chief People Officer Emilie Choi, for their tireless efforts in reshaping how a public company responds to regulatory challenges.
Suffice it to say (as I know there are lots of impatient people, including me!), this SEC has demonstrated a clear interest in moving on quickly (!) from the failed regulation by enforcement policies of the last Administration. 😄 https://t.co/e2Rj9NUiDF
— Brad Garlinghouse (@bgarlinghouse) February 21, 2025
The dismissal, confirmed to be “with prejudice” in response to a follow-up question from Matthew Niemerg on X, means the SEC cannot refile the same case against Coinbase. This development has been met with widespread congratulations from industry figures like Brad Garlinghouse, CEO of Ripple, and Fred Thiel, Chairman and CEO of Marathon Digital Holdings, underscoring the significance of this win for the crypto community.
SEC staff have agreed to dismiss their case against us (pending Commission approval).
But this isn’t the end.
It’s the beginning.
And if there were ever a time to build—that time is now.Thank you to everyone who stood with us, and stood with crypto. pic.twitter.com/gjokUZPotz
— Coinbase 🛡️ (@coinbase) February 21, 2025
Context of the Lawsuit
The SEC initiated its lawsuit against Coinbase in June 2023, alleging that the exchange operated as an unregistered securities platform and brokerage service. The regulator claimed that Coinbase facilitated trading in at least 13 crypto tokens it deemed securities, as well as its “staking” program, which pools customer assets to verify blockchain transactions in exchange for rewards.
The case, led under the tenure of former SEC Chair Gary Gensler, was part of a broader “regulation by enforcement” approach that targeted major crypto firms, including Binance and Kraken, reflecting Gensler’s view of the crypto industry as the “wild west” needing stringent oversight.
Coinbase, however, argued that the SEC overstepped its authority, asserting that the tokens in question were not securities under the U.S. Supreme Court’s Howey test, which defines an investment contract. The company maintained that crypto assets are more akin to collectibles like Beanie Babies or baseball cards—traded in decentralized markets without promises of future profits or common enterprises.
Coinbase’s decision to fight the lawsuit, as articulated by CEO Brian Armstrong in a related X post, was driven by the belief that caving to the SEC’s demands could have stifled the U.S. crypto industry and pushed it offshore.
Related News and Regulatory Shifts
The dismissal of the Coinbase lawsuit aligns with broader shifts in U.S. crypto regulation under the Trump administration, which took office in early 2025. According to reports from Reuters and the Associated Press, the SEC, now under Republican leadership, has moved quickly to overhaul its approach to the crypto sector.
This includes establishing a dedicated crypto task force, rescinding key accounting guidance, and reviewing pending court cases. The decision to drop the Coinbase lawsuit is described as the most dramatic move yet under the new SEC leadership, signaling a departure from the aggressive enforcement tactics of the previous administration.
Brian Armstrong’s comments on X further contextualize this shift, crediting the Trump administration and the departure of Gary Gensler for accelerating accountability. Armstrong also praised the new SEC leadership, including Commissioners Paul Atkins, Mark Uyeda, Hester Peirce, and the newly appointed “DOGE” (a reference to a crypto-friendly appointee), for their role in righting the wrong.
Reuters reports also note that the SEC has paused litigation against Binance, the world’s largest crypto exchange, and is reevaluating other cases against crypto firms like Kraken. However, not all reactions have been positive.
Better Markets, an advocacy group favoring stricter financial oversight, criticized the dismissal as a “historic mistake,” arguing that it undermines the SEC’s ability to enforce the law impartially and favors the crypto industry over investor protection.
Implications for the Crypto Industry
The dismissal of the Coinbase lawsuit is seen as a major win for the crypto industry, removing a significant legal overhang that had deterred some investors, as noted by analysts at Piper Sandler.
Coinbase’s stock rose more than 3.5% on February 21, 2025, reflecting market optimism. Industry leaders, including Armstrong and Grewal, view this as not just an end but a beginning—a call to build and innovate in a regulatory environment that they hope will become more supportive.
However, the victory is tempered by the recognition that legislative clarity remains elusive. Coinbase and other crypto firms continue to push for Congress to pass comprehensive crypto legislation to prevent future regulatory ambiguity.
