Coinbase’s Legal Drama: South Carolina Bows Out, Crypto Investors Rejoice!

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In a twist that could only be described as delightfully ironic, South Carolina has gracefully bowed out of its legal tussle with Coinbase, the crypto exchange that has become the darling of digital asset enthusiasts. This marks the second state to abandon its staking-related lawsuit, following the US watchdog’s sudden shift toward a more… shall we say, “enlightened” approach to the industry. Coinbase’s Chief Legal Officer, Paul Grewal, couldn’t resist calling this development a “victory” for crypto investors. 🎉

On Thursday, Grewal, with the flair of a man who has just won a game of chess, revealed that South Carolina had dismissed its case against Coinbase in a joint stipulation with the state’s Attorney General Securities Division. “The dominoes keep falling,” he quipped, as South Carolina became the second state to wave the white flag in this legal skirmish. 🎲

For those who’ve been living under a rock (or perhaps a blockchain), in June 2023, a coalition of 10 US state regulators, including Alabama, California, and Illinois, accused Coinbase of violating securities law. The multi-state task force issued a Show Cause Order, arguing that the exchange had the audacity to offer its staking rewards program to Alabama residents without the proper registration. The nerve! 😱

On the same day, the Securities and Exchange Commission (SEC) decided to join the party, suing Coinbase for offering unregistered securities and failing to register its staking-as-a-service program. Because, of course, why not pile on? Earlier this month, Vermont decided to bow out of the fray, citing the SEC’s dismissal of its case against Coinbase and the ongoing regulatory changes. “In light of the dismissal of the Federal Action and the likelihood of new federal regulatory guidance, the Division believes it would be most efficient and in the best interests of justice to rescind the pending Show Cause Order, without prejudice,” the March 13 court document reads. Translation: “We’re out. Good luck, everyone else!” 🏃‍♂️

Coinbase’s CLO noted that South Carolinians lost over $2 million from staking rewards due to this case and considers yesterday’s dismissal a victory for the 52 million American crypto investors, who “deserve commonsense consumer protections and clear rules.” Grewal also applauded South Carolina’s decision, hoping it is “a sign of things to come in the few states left that restrict staking.” Because, let’s face it, who doesn’t love a good domino effect? 🎳

Notably, the US crypto landscape has become friendlier under the new administration. The SEC, led by acting chair Mark Uyeda, is working on creating a clear regulatory framework, seeking public input to address the long-standing regulatory challenges it has faced. Amid the ongoing changes, the Commission has dismissed or paused several key crypto lawsuits over the past two months, including Coinbase, Robinhood, and Binance. The regulatory agency continued its crypto litigation retreat on Thursday, officially dropping three cases and closing one investigation. 🕊️

As journalist and Podcast Host Eleanor Terrett reported, the SEC closed its investigation into Crypto.com with no enforcement action and “formally announced litigation dismissal against Kraken, Consensys, and Cumberland.” Terret noted that the Ripple lawsuit wasn’t included because “it is slightly different to these other cases in that (…) the SEC now has to go to the Southern District and ask Judge Torres to lift the standard injunction. Once that is done, they can vote on everything at once, including the withdrawing of the appeal.” Because, of course, the SEC loves a good bureaucratic dance. 💃

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2025-03-29 07:43