On Friday, Coinbase announced that the 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 a potential shift towards a more crypto-friendly stance under the Trump administration compared to the SEC’s approach under former leader Gary Gensler.
The SEC had initially filed a lawsuit in 2023, claiming that crypto assets were securities and that Coinbase was functioning as an “unregistered national securities exchange, broker, and clearing agency.” Coinbase opposed these allegations, contending that the SEC had not provided sufficiently clear regulations concerning cryptocurrency to justify the lawsuit.
Coinbase CEO Brian Armstrong, in a video posted on X, recalled the widespread advice in 2023 warning against litigation with the SEC due to the potential high costs involved. In the video, Armstrong discussed the SEC’s motivations and tactics, stating that the legal battle was necessary to protect the crypto industry in the United States.
Armstrong noted that many companies lacked the financial resources to contest the SEC in a similar manner. He disclosed that Coinbase ultimately spent $50 million defending the case, highlighting the financial burden predicted by many advisors.
A Coinbase representative clarified that the $50 million expenditure was solely for external legal fees and did not account for employee time.
Despite this legal resolution, Armstrong stressed the need for the US to establish legislation for cryptocurrency to create favorable regulations, warning of the risk of falling behind other countries if this is not accomplished.
