US SEC Agrees To Drop Coinbase Lawsuit, COIN Stock Surges

Coinbase has revealed that the US SEC has agreed to drop the long-running legal battle against the top crypto exchange. The agreement to drop the Coinbase lawsuit represents a massive development in the Commission’s move to create a regulatory-friendly environment for the crypto industry. Meanwhile, the COIN stock price surged on the back of this development.

US SEC To Drop Coinbase Lawsuit

In a press release, Coinbase revealed that the US SEC staff has agreed in principle to dismiss its “unlawful enforcement” case against the crypto exchange, subject to Commissioner approval. The top crypto exchange highlighted how this agreement to drop the Coinbase lawsuit rights a “major wrong.”

Coinbase noted that it has always maintained that it was right on the facts and the law and that today’s announcement confirms that the US SEC should have never filed this case in the first place.

Coinbase’s Chief Legal Officer Paul Grewal said this is a victory not just for the exchange but for customers, the United States, and individual freedom. The Commission, under former SEC Chair Gary Gensler, had sued the exchange in 2023, accusing the firm of offering unregistered securities on its trading platform.

Meanwhile, to ensure that “a rogue regulator cannot weaponize the lack of clarity again,” Coinbase stated that the US Congress must pass legislation that provides the long-term certainty needed for the country to lead in the crypto industry. The exchange added that clarity will bring new inflows of capital into the US, update the country’s financial system so consumers can pay lower fees, and help create economic freedom for all.

Coinbase CEO Brian Armstrong Reacts

In an X post, Armstrong revealed that there would be a full dismissal of the Coinbase lawsuit once the Commissioners approve the agreement, possibly by next week. The CEO remarked that the exchange would pay nothing in fines and no change to their business.

He further mentioned that this development is “hugely vindicating” because many people questioned his decision to engage in litigation with the US SEC on this matter when the Commission sued them in 2023.

Brian Armstrong revealed how people discouraged him from engaging in litigation, arguing that the courts would give a lot of leeway to the US SEC and that public market investors wouldn’t like the exchange going to court. He claimed that people also argued that the case would take years and, that the exchange could spend millions of dollars in legal fees, and that the agency would use “mafia tactics” during the case.

However, the CEO outlined a “few truths” that convinced him to proceed with the SEC Coinbase lawsuit. First, he stated that he knew the Commission was wrong on the law. Secondly, he remarked that caving to the SEC’s demands could have killed the crypto industry in America. Lastly, he stated that proceeding with the lawsuit was the right thing to do for their customers and the industry.

The COIN stock price is up over 4% following news of the SEC’s agreement to drop the Coinbase lawsuit. The stock is currently trading at around $270.

The SEC’s agreement to drop the Coinbase lawsuit has raised the possibility of the Commission also dropping other non-fraud cases against crypto firms such as Ripple. Former SEC lawyer John Reed Stark had before now stated that the agency would drop the Ripple case after the Coinbase case.