Coinbase and OpenSea Get SEC Reprieve as Crypto Industry Senses a Thaw Under New Leadership

Cryptocurrency exchange giant Coinbase has reached an agreement with the U.S. Securities and Exchange Commission (SEC) to dismiss the financial regulator's case against Coinbase, marking a dramatic turn of events from when Gary Gensler was the agency Chair.

Coinbase, a major cryptocurrency exchange, announced Friday that the U.S. Securities and Exchange Commission (SEC) staff has agreed to dismiss its case against Coinbase, pending approval by the full Commission.

The SEC is also closing its investigation into the non-fungible token (NFT) marketplace OpenSea, according to Devin Finzer, the co-founder of the platform.

Coinbase applied for a direct listing with the SEC in 2020, but the financial regulator sued the exchange in April 2021, alleging that Coinbase failed to register its Lend program with the SEC. Coinbase countered that the SEC had shifted its position on the matter.

Coinbase CEO Brian Armstrong announced the development in a video Friday, adding that the Commissioners still need to take a vote on the matter, but the exchange is hopeful.

"If this goes through, it's a really big deal, not just for us, but for the whole crypto industry," he said.Coinbase is also awaiting a verdict in a separate lawsuit filed by the Commodity Futures Trading Commission (CFTC) over the exchange's margin trading products.

Coinbase had argued that the CFTC lacks jurisdiction over the matter, as the exchange's customers are trading cryptocurrencies, which are not commodities. A federal judge had ruled against Coinbase in the case last year, but the exchange appealed the decision.

Coinbase expressed gratitude to the revamped SEC under Acting Chair and Commissioner Mark Uyeda for making the dismissal deal possible. Armstrong said in the video that the SEC staff had changed its position on the matter after Gensler left the agency.

"The SEC staff changed their position on our Lend program after Gensler left the agency. They realized that their case was flawed and that they couldn't win. So they offered to dismiss the case without any settlement or compromise," Armstrong said.

"This is a huge victory for Coinbase and for the crypto industry as a whole. It shows that the SEC is finally starting to take a more pragmatic approach to regulating crypto."

Coinbase Chief Legal Officer Paul Grewal elaborated on the matter in a series of posts on Medium, revealing that the case will be dismissed "with prejudice."

"Case dismissed." Two words that every defendant in every case yearns to hear. Today we can announce upon full Commission approval @SECGov is dropping our case. There will be no settlement or compromise-- a wrong will simply be made right. 1/4

"A dismissal 'with prejudice' means the case cannot be refiled later, not even a settlement agreement with some major concessions."

Attorney Jeremy Hogan, a well-followed figure in crypto, explained that a lawsuit that will be dismissed with prejudice means the case "cannot be refiled later, not even a settlement agreement with some minor concessions!"

The Coinbase Case was Dismissed WITH Prejudice - meaning it cannot be refiled later; not even a settlement agreement with some minor concessions!

I guess this SEC is not waiting for Atkins to be confirmed before making big crypto moves.

Ripple --> https://t.co/99TyHvWMLf pic.twitter.com/XYHlHlDQpt

For Grewal, the case's dismissal following an official Commissioners' vote will mean that "the U.S. can finally get back to doing what it does best: building innovative tech that improves the world."

"When the dust fully settles on this matter, the U.S. will be able to finally get back to doing what it does best: building innovative tech that improves the world. And that will be a victory for everyone."

Financial services lawyer James Murphy, another popular crypto lawyer who goes by MetaLawMan on social media, is expecting "more dismissals to follow."

Victory is at hand.

@Coinbase just announced that the SEC staff has agreed to DISMISS its case.

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