SEC Expected to Drop Lawsuit Against Coinbase

Coinbase announced on February 21 that the U.S. Securities and Exchange Commission (SEC) is expected to dismiss its lawsuit against the crypto exchange it started back in 2023 (!). Analysts at H.C. Wainwright & Co. called the development a major win for both the company and the broader crypto industry.

The lawsuit, filed in June 2023, accused Coinbase of offering unregistered crypto asset securities and operating illegally as an exchange, broker, and clearing firm. If the case is dropped, it would remove a major regulatory obstacle that has weighed on Coinbase’s stock. Analysts believe this could also signal a shift in the SEC’s approach to crypto regulation.

While final approval from SEC commissioners is still pending, Coinbase’s management remains optimistic that the case could be officially closed as early as next week, according to analyst Mike Colonnese.

A dismissal would not only reduce Coinbase’s legal expenses but could also allow the company to expand its business. Analysts Colonnese and Dylan Scales noted that Coinbase’s staking services have been constrained since the lawsuit was filed. They believe the company could now grow its staking operations and accelerate new crypto listings, which would boost both transaction and subscription revenues.

If confirmed, the SEC’s decision could mark a turning point for Coinbase and potentially influence future regulatory actions toward the crypto industry.