In what could be seen as another win for the exchange and the broader cryptocurrency landscape, Illinois has become the fourth US state to withdraw its lawsuit against Coinbase.
This decision aligns with a broader trend among states stepping back from legal actions against the platform, following the US Securities and Exchange Commission’s (SEC) recent move to drop its federal lawsuit against Coinbase and other key firms of the industry.
States Follow SEC’s Lead In Dropping Lawsuits Against Coinbase
The SEC’s decision in February marked a pivotal moment in crypto regulation under the Trump administration, signaling a potential shift toward more favorable oversight for digital asset exchanges.
Originally, ten states filed lawsuits against Coinbase in June 2023, largely mirroring the SEC’s complaint, which alleged that the exchange had violated securities laws through its staking program.
This program allowed users to earn rewards by locking up their digital assets, a practice the regulatory agency contended constituted an alleged “unregistered securities offerings.”
Illinois Secretary of State Alexi Giannoulias confirmed the state’s intention to withdraw its complaint, although no specific timeline for the case closure was provided.
This withdrawal comes on the heels of similar actions by Vermont, South Carolina, and Kentucky, who have each retracted their lawsuits in recent weeks, following the SEC’s lead.
However, not all states are retreating. Six states—Alabama, California, Maryland, New Jersey, Washington, and Wisconsin—continue to pursue their cases against Coinbase.
Paul Grewal Urges Congress To Clarify Crypto Regulations
Officials from New Jersey and Washington have confirmed that their litigation remains active, while the other states have yet to issue public statements regarding their lawsuits.
Amid this evolving landscape, Coinbase has consistently advocated for a clearer federal regulatory framework to replace the fragmented state-by-state enforcement approach.
The exchange’s Chief Legal Officer (CLO) Paul Grewal reiterated this stance, urging Congress to pass comprehensive legislation that would provide clarity for the cryptocurrency market. “It’s time to stop regulating through lawsuits and bring clarity with federal legislation,” he stated.
In a sign of positivism following these regulatory developments, Coinbase CEO Brian Armstrong also heralded the outcomes of the White House Digital Asset Summit as a “historic day” for the US cryptocurrency industry, reflecting a growing recognition of the need for cohesive regulation.
Contributing to the impact of these legal developments, the US Securities and Exchange Commission has also dropped its lawsuits agains Kraken, Binance, Ripple, and Robinhood, alongside with other cases that reflect President Donald Trump’s support toward digital assets in the country.
Featured image from DALL-E, chart from TradingView.com
