Maybe the first “S” in SEC should stand for speedy?
The Securities and Exchange Commission is dropping investigations against crypto exchanges Robinhood and Coinbase, swiftly making good on speculation that the agency would take a hands-off approach to regulation during Trump’s presidency, especially with respect to crypto.
While expected, this was fast. On Friday, Coinbase, the major player among US crypto exchanges, said the SEC “agreed in principle” to drop its lawsuit against the company “subject to Commissioner approval.”
The Coinbase lawsuit, which was brought forth by the SEC in June 2023, alleged that the company was operating as an unregistered securities exchange and broker, making billions by “unlawfully facilitating the buying and selling of crypto asset securities.”
Specifically, the SEC was concerned with how Coinbase allegedly intertwined “the traditional services of an exchange, broker, and clearing agency without having registered any of those functions with the Commission as required by law.”
The lawsuit represented an existential threat to the crypto industry by arguing that the core functioning of Coinbase, the publicly traded industry behemoth, ran outside of the law.
That threat appears over. Paul Grewal, Coinbase’s chief legal officer, told the New York Times in an interview that the agreement amounted to “nothing short of a complete win” for the company, adding that the SEC agreed to drop the case without prejudice so the lawsuit cannot be brought forth again. “The case goes away as if it had never been filed,” Grewal said.
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And now, just three days later, Robinhood can breathe a sigh of relief.
On Monday, the crypto exchange said the SEC “officially closed” its investigation into the company, adding that it “did not intend to move forward with an enforcement action.” Back in May 2024, Robinhood received notice that it could face enforcement action for failure to register crypto assets on its platform as securities.
The company learned about the probe being closed via a letter on Friday. Dan Gallagher, Robinhood’s chief legal, compliance and corporate affairs officer, cheered the decision in a statement, adding the company “always has and will always respect federal securities laws and never allowed transactions in securities.”
It’s a good week for the crypto industry.
For anyone concerned about the political influence of billionaire tech execs in Washington, it’s less of a good week. This election cycle, the crypto industry poured millions into electing pro-crypto lawmakers—and a return on investment was implied.
“The SEC used to enforce the law without fear or favor but is now favoring the crypto industry and fearing billionaire crypto kingpins who are publicly belittling the agency,” Dennis Kelleher, CEO of Better Markets, a nonprofit that advocates for Wall Street regulation, told the New York Times.