U.S. President Donald Trump’s Securities and Exchange Commission has delivered a significant victory to the cryptocurrency industry by agreeing to drop a major lawsuit against Coinbase, a crypto exchange platform company that spent heavily on the 2024 election and donated a million dollars to President Donald Trump’s inauguration.
The SEC’s decision, announced Friday by Coinbase’s chief legal officer, marks the latest evidence of the nascent industry’s growing political influence and the current administration’s readiness to ditch corporate enforcement efforts. The New York Times noted Friday that the SEC under the Biden administration sued Coinbase in 2023 “on the grounds that the digital currencies sold on its platform constituted unregistered securities that put consumers at risk of financial harm.”
Robert Weissman, co-president of the consumer advocacy group Public Citizen, said in a statement that “the SEC abandonment of its case against Coinbase is proof positive that the crypto industry’s flood of campaign spending has paid off.”
“The now-abandoned lawsuit against Coinbase involved the most basic assertion of SEC authority: Coinbase cryptocurrency offerings are actually securities and must be registered and regulated as such,” said Weissman. “Retreat from this basic assertion is a massive gift to the industry, which can only be understood in light of its massive political spending in the last election.”
According to the campaign finance watchdog OpenSecrets, Coinbase spent over $46 million trying to influence the 2024 election, part of a broader wave of spending from the cryptocurrency industry.
A trio of pro-crypto super PACs spent over $130 million in an effort to “elect a crypto-friendly president and members of Congress,” OpenSecrets noted in a blog post just days before the 2024 contest.
Public Citizen argued ahead of the 2024 election that Coinbase’s campaign spending appeared to be illegal because the company is a federal contractor.
The SEC is currently led by Acting Chair Mark Uyeda, whom Trump appointed to the post following the resignation of former Chair Gary Gensler, a proponent of tough crypto regulation.
Following the November election, Coinbase CEO Brian Armstrong met privately with Trump, who has profited massively from his own foray into crypto. The two discussed personnel appointments, according to The Wall Street Journal.
Since taking office last month, Trump has moved to stock his administration with crypto enthusiasts, including some with glaring conflicts of interest.
The Coinbase CEO’s sister, Kathryn Armstrong Loving, has been identified as a member of the Elon Musk-led Department of Government Efficiency. Coinbase, meanwhile, “brought on Trump’s campaign co-manager Chris LaCivita as a member of its Global Advisory Council,” Sludge reported.
Weissman of Public Citizen warned Friday that “when the crypto crash happens,” the SEC’s decision to drop its lawsuit against Coinbase “will go down as one that made it far worse than it would have been.”
“The SEC decision is also an important marker in the Trump administration’s rush to abandon prosecution and enforcement actions against corporate criminals and wrongdoers,” he added. “This is not just an abandonment of those already wronged by corporate wrongdoers, it is an invitation to a corporate crime spree and epidemic of corporate wrongdoing. Americans, watch your head, watch your wallet, and watch your back.”
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