Crypto industry gets major boost as SEC plans to drop Coinbase lawsuit
Alona Yadav | Feb 22, 2025, 13:26 IST
( Image credit : AP )
The SEC has dropped its lawsuit against Coinbase, marking a major shift in US cryptocurrency regulation. The lawsuit accused the exchange of operating without proper registration. Coinbase's CEO, Brian Armstrong, highlighted the victory as crucial for the industry's future. Concurrently, Bybit disclosed a $1.4 billion hack, underlining ongoing security challenges in the sector.
In a significant turning point for the cryptocurrency industry, Coinbase announced Friday that the Securities and Exchange Commission (SEC) will abandon its high-stakes lawsuit against America's largest crypto exchange. The news arrives amid a broader shift toward cryptocurrency deregulation under the Trump administration.
The SEC's original lawsuit, filed in June 2023, accused Coinbase of operating as an unregistered broker, exchange, and clearing agency. The regulator claimed the company had unlawfully generated billions in revenue by failing to register these functions as required by law. A similar case against rival exchange Binance was recently paused.
Coinbase CEO Brian Armstrong celebrated the development on X, framing the company's legal battle as a stand for the entire crypto industry's survival. "Caving to their demands could have killed the crypto industry in America," Armstrong stated. "If we had caved, it would have dramatically limited the scope of which crypto assets were allowed in the US, and pushed the industry further offshore, into the shadows."
The decision aligns with the Trump administration's new approach to cryptocurrency regulation. Despite previously dismissing crypto as a scam, Trump has reversed course, signing an executive action to ease regulatory restrictions just days after taking office. Paul Atkins, Trump's nominee for SEC Chair, is expected to implement a notably lighter regulatory touch compared to his predecessor, Gary Gensler.
This development coincided with troubling news from another sector of the crypto world. Bybit, a major cryptocurrency exchange, reported that an attacker had gained control of an ethereum wallet containing $1.4 billion, marking one of the largest cryptocurrency heists in history. Bybit CEO Ben Zhou assured users that the company remains solvent and can cover the losses, emphasizing that client assets are fully backed.
The scale of such security breaches remains a serious concern for the industry. According to blockchain analysis firm Chainalysis, crypto platforms lost an average of $2.75 billion to theft annually between 2021 and 2024.
Coinbase expects the SEC to formally approve the lawsuit's dismissal next week, with no fines or fees imposed on the company. The SEC has not yet responded to requests for comment on this development.
For the cryptocurrency industry, the SEC's decision to drop its case against Coinbase represents a dramatic shift in the regulatory landscape, potentially opening the door for expanded crypto operations within the United States. However, the concurrent Bybit hack serves as a stark reminder of the ongoing security challenges facing digital asset platforms.
The SEC's original lawsuit, filed in June 2023, accused Coinbase of operating as an unregistered broker, exchange, and clearing agency. The regulator claimed the company had unlawfully generated billions in revenue by failing to register these functions as required by law. A similar case against rival exchange Binance was recently paused.
Coinbase CEO Brian Armstrong celebrated the development on X, framing the company's legal battle as a stand for the entire crypto industry's survival. "Caving to their demands could have killed the crypto industry in America," Armstrong stated. "If we had caved, it would have dramatically limited the scope of which crypto assets were allowed in the US, and pushed the industry further offshore, into the shadows."
The decision aligns with the Trump administration's new approach to cryptocurrency regulation. Despite previously dismissing crypto as a scam, Trump has reversed course, signing an executive action to ease regulatory restrictions just days after taking office. Paul Atkins, Trump's nominee for SEC Chair, is expected to implement a notably lighter regulatory touch compared to his predecessor, Gary Gensler.
This development coincided with troubling news from another sector of the crypto world. Bybit, a major cryptocurrency exchange, reported that an attacker had gained control of an ethereum wallet containing $1.4 billion, marking one of the largest cryptocurrency heists in history. Bybit CEO Ben Zhou assured users that the company remains solvent and can cover the losses, emphasizing that client assets are fully backed.
The scale of such security breaches remains a serious concern for the industry. According to blockchain analysis firm Chainalysis, crypto platforms lost an average of $2.75 billion to theft annually between 2021 and 2024.
Coinbase expects the SEC to formally approve the lawsuit's dismissal next week, with no fines or fees imposed on the company. The SEC has not yet responded to requests for comment on this development.
For the cryptocurrency industry, the SEC's decision to drop its case against Coinbase represents a dramatic shift in the regulatory landscape, potentially opening the door for expanded crypto operations within the United States. However, the concurrent Bybit hack serves as a stark reminder of the ongoing security challenges facing digital asset platforms.