Coinbase (COIN) Soars Amid SEC’s Plan to Dismiss Enforcement Case

The legal battle between the United States Securities and Exchange Commission (SEC) and the publicly listed crypto exchange Coinbase will end soon after nearly two years. Following the announcement, Coinbase’s stock, COIN, jumped over 5% on its pre-market price.

SEC to Drop Case Against Coinbase

In June 2023, the SEC sued Coinbase over claims that the crypto exchange facilitated unregistered securities sales. The financial watchdog also accused Coinbase of offering illegal broker services and a clearing agency. At the time, former SEC chairman Gary Gensler headed the regulatory agency. Coinbase’s rival exchange, Binance, was also slammed with similar charges.

Following the latest development, Coinbase’s CEO and co-founder, Brian Armstrong, provided insight into the two-year-long legal tussle’s impact on the American exchange. He explained that the firm spent “tens of millions of dollars in legal fees” and lost some partnerships with other companies due to the SEC’s ongoing lawsuit.

The SEC’s argument was based on the premise that most cryptocurrencies listed on the exchange are classified as securities, a financial instrument that must be registered with the regulatory agency. Armstrong stressed that caving to the SEC’s demands would have killed the crypto industry in the U.S.

Since Donald Trump’s election victory and inauguration, crypto-friendly individuals have occupied most regulatory offices in the U.S., including the SEC. Under the acting SEC chairman, Mark Uyeda, various crypto-focused platforms have seen friendlier case settlements.

Following the SEC’s agreement to drop its enforcement case against Coinbase, Armstrong noted that the crypto exchange would pay no fine for the complete dismissal. He added that the Commission would approve the dismissal next week.

Meanwhile, Coinbase’s COIN rose over 5% premarket to $262.52 shortly after the dismissal news.

Not the End of the Road

Although the current administration favors crypto-focused platforms, Coinbase’s chief legal officer, Paul Grewal, stressed that there is still much work to do. He believes that establishing laws to govern the crypto sector in the country is needed so that such regulatory crackdown will not occur 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,” he said.