Attempted Theft of the World's Most Valuable Property, SEC Lawfare & The ETHgate Scandal

 The US Securities and Exchange Commission (SEC) has abandoned its appeal of a contentious dealer rule designed to classify digital asset operations as regulated securities dealers broadly.

• A federal judge ruled that the SEC had exceeded its authority by potentially categorizing nearly any participant in buying and selling securities as a dealer.

• This decision is part of a broader reset in the SEC's approach to digital assets under new leadership.

• The agency’s move to drop the appeal, amid concerns that continued litigation could reduce Treasury market liquidity and increase taxpayer costs.

• Additionally, the SEC recently sought to pause its enforcement actions against Binance, indicating its readiness to resolve disputes through alternative means.

• Blockchain Association CEO welcomed the dismissal, expressing hope for more productive discussions between regulators and the crypto industry as the US embraces a friendlier regulatory framework for digital assets.

What’s next: With acting chairman Mark Uyeda overhauling senior staff and legal strategies, the SEC is shifting away from its historically adversarial stance, a policy long associated with former chairman Gary Gensler.

For builders and investors: The new approach encourages constructive conversations between regulators and industry players, potentially leading to clearer guidelines and a more predictable operating landscape for both builders and investors.

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SEC staff has agreed in principle to dismiss its unlawful enforcement case against Coinbase, subject to Commissioner approval – righting a major wrong. We’ve always maintained that we were right on the facts and the law, and today’s announcement confirms that this case should never have been filed in the first place. This is a victory not just for Coinbase, but for our customers, the United States, and individual freedom. 

Coinbase went public in April 2021. As part of that process, the SEC reviewed our business model and S1 disclosures and allowed us to go public. Two years later, they sued us. That’s despite absolutely nothing changing in our business model. 

What changed over those two years was the political leadership at the SEC. 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.

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. To ensure innovation continues in America and a rogue regulator cannot weaponize the lack of clarity again, it is critical that we pass legislation which provides the long-term certainty needed for the US to lead in this industry. Clarity will bring new inflows of capital into the US, update our financial system so consumers pay lower fees, and help create economic freedom for all.

We believe we will eventually get to a point where the majority of global GDP runs on crypto rails. The key question is whether America will seize the opportunity to build this infrastructure, or be left behind. Today, we helped the US take a major step toward building this industry onshore. We must enable entrepreneurs, builders, and innovators to update our financial system and bring the world onchain.

We look forward to working with the SEC staff who stand ready to implement real change. In the meantime, Coinbase will never stop fighting for what’s right. Let’s keep building.

Forward-Looking Statements

This blog contains forward-looking statements including, but not limited to, statements related to Coinbase’s expectations regarding the status of its ongoing litigation with the SEC. These forward-looking statements are based on management’s beliefs and assumptions and on information available to management as of the date they are made. However, investors should not place undue reliance on any such forward-looking statements because they speak only as of the date they are made. Coinbase does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results, events and developments to differ materially from Coinbase’s historical experience and its present expectations or projections. These risks and uncertainties include, but are not necessarily limited to, those described in Coinbase’s filings with the SEC.

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