South Carolina Drops Its Lawsuit Against Coinbase, Marking Another Win for the Crypto Exchange

South Carolina has officially dropped its lawsuit against Coinbase, marking another win for the crypto exchange in its ongoing legal battles

South Carolina has officially dropped its lawsuit against Coinbase, marking another win for the crypto exchange in its ongoing legal battles.

The lawsuit, initially filed on June 6, 2023, by the South Carolina Attorney General's securities division, accused Coinbase of offering unregistered securities through its staking program. However, a joint stipulation led to the lawsuit's dismissal on March 27, according to a report by Law360.

This follows a similar decision from Vermont, making South Carolina the second state to drop its case against Coinbase.

“South Carolina just joined Vermont to dismiss its unfounded staking lawsuit against Coinbase,” said Paul Grewal, Coinbase's Chief Legal Officer, in a statement. “This is a victory not just for Coinbase but also for American consumers, and we hope the remaining states with bans on staking will take notice.”

Grewal further expressed his gratitude towards the South Carolina Attorney General for resolving the issue. "We appreciate the work of Attorney General to get this issue resolved for SC consumers."

The lawsuit's impact was significant as it prevented South Carolina residents from participating in Coinbase's staking program. Grewal noted that these residents missed out on roughly $2 million in staking rewards due to the legal action.

“The 52 million Americans who own crypto deserve commonsense consumer protections and clear rules,” Grewal added. “We applaud South Carolina for standing up for justice and hope the remaining states with bans on staking will take notice.”

South Carolina and Vermont were among the ten states that took legal action against Coinbase's staking services. The other eight states—Alabama, California, Illinois, Kentucky, Maryland, New Jersey, Washington, and Wisconsin—have yet to follow suit.

This wave of dismissals comes after the Securities and Exchange Commission (SEC) officially dropped its own lawsuit against Coinbase on February 27. The agency stated that this move would help in its efforts to reform crypto regulations, signaling a possible shift in its stance on digital assets.

As Coinbase continues to navigate the evolving legal landscape, the crypto giant is also pushing for clear and fair regulations in the industry. Grewal recently voiced strong support for Paul Atkins, who has been nominated as the next SEC Chairman.

During a Senate Banking Committee hearing, Grewal highlighted the importance of a transparent regulatory framework under Atkins's leadership.

“Getting workable rules and regulatory clarity for crypto will unlock US-based innovation, open new markets for investors, and benefit American consumers and America’s position as a global technological and financial power,” Grewal asserted.

In contrast, Atkins criticized the current regulatory landscape, calling it "unclear, overly politicized, complicated and burdensome." He argued that these issues are stifling capital formation and preventing innovation in digital assets.

Moreover, Atkins and Comptroller of the Currency nominee Jonathan Gould expressed their opposition to "debanking," which they deem undemocratic. Grewal reinforced this sentiment, stating, "It’s time for the SEC to get back to basics."