SEC agrees to dismiss case against Coinbase in principle, subject to Commissioner approval

The Securities and Exchange Commission has agreed in principle to dismiss its case against Coinbase, according to an announcement from the crypto exchange on Friday."SEC staff has agreed in principle to dismiss its unlawful enforcement case against Coinbase, subject to Commissioner approval — righting a major wrong," Coinbase Chief Legal Officer Paul Grewal wrote in the blog post.The crypto exchange giant said it has always maintained it was right on the facts and the law, and the case should never have been filed. "While dismissal will be a major win for the rule of law — and a clear vindication of our position — most of all it will be a win for the entire industry and the 52 million Americans who have owned a digital asset," Grewal said.Grewal subsequently posted the announcement on X, thanking the crypto exchange's leadership, legal team and its lawyers at Wachtell and Sullivan & Cromwell. "There will be no settlement or compromise — a wrong will simply be made right."Grewal warned there was still work to do, however, saying legislation was critical to avoid such cases in the future. "We won’t stop fighting until we have the clear rules needed to enable the industry to truly thrive in the United States. Collaboration will be key. We look forward to working with Congress and SEC staff on this next phase of progress."Meanwhile, Coinbase CEO Brian Armstrong said it was told to expect the SEC Commission's approval of the dismissal next week. Armstrong described the news as "hugely vindicating," especially as many had questioned his decision to engage in litigation with the SEC on the matter since 2023.Armstrong explained that there were three reasons why Coinbase decided to fight the agency in court: the SEC was wrong on the law, caving into its demands would have "killed" the crypto industry in the U.S., and it was the right thing to do for Coinbase's customers and the industry. The SEC's lawsuit against CoinbaseThe SEC sued Coinbase in June 2023, two years after the firm went public, alleging it had violated U.S. securities laws. In the lawsuit, the SEC said Coinbase merged three functions typically separated in traditional securities markets: brokers, exchanges and clearing agencies. "Yet, Coinbase has never registered with the SEC as a broker, national securities exchange, or clearing agency, thus evading the disclosure regime that Congress has established for our securities markets," the regulator noted at the time.The SEC also named several tokens as securities in the lawsuit, including SOL, ADA, MATIC, FIL, SAND, AXS, NEAR and DASH.The lawsuit did not come as a surprise, however, with the SEC already issuing the company a Wells notice the March before — a formal notification informing individuals or companies that the agency intends to bring an enforcement action against them."What changed over those two years was the political leadership at the SEC," Coinbase said on Friday. "In its war against crypto, it acted as if it was above the law, usurping the power of Congress as set forth in the Constitution. And after millions in legal costs and fees, countless employee hours, and years of protracted litigation, we have successfully protected our customers' rights and held the SEC accountable."Former SEC Chair Gary Gensler left the agency in January following the inauguration of pro-crypto President Trump. Crypto-friendly former regulator Paul Atkins was tapped by Trump to lead the SEC under the new administration, pending Senate confirmation. Meanwhile, the SEC has also established a new crypto task force under the leadership of Commissioner Hester Peirce, aimed at creating a clear regulatory framework for cryptocurrencies — in stark contrast to its regulation-by-enforcement approach under Gensler."I have to give credit here to the Trump administration, for winning the election, and for the departure of the activist head of the SEC, Gary Gensler, who orchestrated this unlawful action along with Elizabeth Warren, and a handful of their lackeys in Congress," Armstrong said. "I look forward to the SEC being reformed under Paul Atkins, Mark Uyeda, Hester Peirce and DOGE, and new more sensible personnel coming into leadership roles.""Now the U.S. can finally get back to doing what it does best: building innovative tech that improves the world," Grewal added.Coinbase stock is up around 5% to $270 in pre-market trading on Friday following the news, TradingView.An SEC spokesperson declined to comment when reached by The Block.Updated with additional details throughout.Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.© 2025 The Block. 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