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The SEC’s Retreat From Crypto Enforcement May Invite More Private Lawsuits

Published

6 месяцев ago

12 марта, 2025

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Until the new presidential administration took office, the digital asset industry was embroiled in an existential showdown with the U.S. Securities and Exchange Commission. For years, the SEC waged a scorched-earth regulation-by-enforcement campaign against the digital asset industry and its most-used platforms for failing to adhere to confusing — or non-existent — rules about what constitutes a security and who must register to buy and sell them. Now, under new leadership, the SEC has confirmed the end of its regulation-by-enforcement era.

While this shift has dramatically reduced (though not eliminated) exposure to regulatory suits by the agency, the industry must prepare for private plaintiffs to exploit the enforcement void and perpetuate, at least in the near term, ambiguities in the application of federal securities laws by bringing suits in U.S. courts alleging that particular digital assets are securities and seeking to hold businesses and their leaders responsible for withholding material information or other alleged misconduct, in violation of the securities laws.

The SEC’s Enforcement U-Turn

Under its new leadership, the SEC has confirmed the end of the regulation-by-enforcement era and taken significant steps to progress its policy goals, including a focus on prosecuting bad actors and fraud in the digital asset space. The most significant regulatory shifts include:

Crypto Task Force: Just one day into his tenure as SEC Acting Chair, Commissioner Uyeda announced the formation of a “Crypto Task Force” and, in doing so, publicly recognized what so many had long been saying: the SEC’s refusal to promulgate rules and instead regulate by enforcement sowed “confusion about what is legal” including “who must register” to trade digital assets and, importantly, how to register. The Crypto Task Force’s stated mission is to provide clarity to these questions and develop a regulatory framework for digital assets. It is hosting a series of industry roundtables, with the first to focus on how to define which digital assets are securities. .

Enforcement Action Dismissals: The SEC has dismissed (or agreed in principle to dismiss) nearly all non-fraud cases concerning allegations that a defendant failed to register as an exchange or broker-dealer.

Cyber and Emerging Technologies Unit: The SEC replaced the Crypto Assets and Cyber Unit with the Cyber and Emerging Technologies Unit (“CETU”), which is focused on protecting “retail investors from bad actors.” The SEC announced that CETU and its 30 fraud specialists and attorneys (down from more than 50) would focus on “[f]raud involving blockchain technology and crypto assets” among other priorities.

These changes indicate that SEC enforcement in the digital asset space will undoubtedly decline, given that the agency will no longer use its enforcement arm as the primary means to create regulatory policy and its associated reduction in staff focused on blockchain and crypto matters. According to the SEC, its staff remains committed to prosecuting bad actors and fraud-based claims, with Commissioner Hester Peirce clarifying that the shift in priorities and resources is not an end to SEC enforcement and that “statutes already on the books do not allow a free-for-all.”

Unsettled Law is an Opportunity for Litigation

In the face of the SEC’s enforcement retreat, individuals and firms should be prepared for private plaintiffs to exploit the enforcement void. Historically, the private plaintiffs’ bar has stepped in to pursue litigation in the wake of decreased regulatory enforcement (or at least the perception of it), whether it be suits alleging violation of the federal antitrust laws or financial misconduct in violation of the securities laws following the 2008 crisis. Such private suits, often brought as class actions, can be an expensive nuisance for businesses and their founders (often named as defendants themselves) — even for those who prevail at an early stage.

In the digital asset space, private plaintiffs may still use the federal securities laws as a basis to bring a variety of allegations, including:

selling unregistered securities;

engaging in the sale of securities by means of a prospectus (e.g. white paper) containing untrue statements or omissions of material facts;

securities fraud and other misconduct (e.g. rug pulls or pump-and-dump schemes);

violations by individuals who have decision-making control over the seller, such as founders or company leadership

Private plaintiffs may also pursue alleged violations of state securities laws and other common law causes of action.

Although the SEC’s new interpretation of the securities laws is more aligned with industry thinking, it does not bind courts analyzing the question of whether a digital asset is a security. For instance, private plaintiffs pursued the TRON Foundation and its founders, alleging that they misled investors by promoting, offering, and selling TRX — an alleged security — in violation of the federal and state securities laws. Late last year, the U.S. District Court for Southern District of New York denied in part the defendants’ motion to dismiss, and in doing so, explained that the SEC’s previous framework for determining whether crypto assets were securities was a “nonbinding interpretation of a legal standard.”

And while decisions from appellate courts are binding on the courts below them, the SEC recently dismissed a suit (involving Coinbase) that was pending appellate review on the issue of whether crypto asset transactions qualify as securities. Another similar suit is rumored to be dismissed soon. This means, for now, that lower courts will continue to lack guidance from a higher court on that issue, leaving private plaintiffs free to argue that the federal securities laws apply.

As a result, companies should expect an increase in private litigation. One area to watch is meme coins. While there are persuasive arguments for why meme coins should not be considered securities, private plaintiffs are sure to argue that the circumstances of a particular meme coin bring it within the ambit of the federal securities laws.

This year has been mostly positive for the digital asset industry. It has escaped the grip of an agency that was seemingly determined to crush it. But businesses and their founders re-evaluating their legal risk should confer with their legal teams on whether they may be targets of increased private litigation, so they can create strategies to mitigate such exposure.

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Is Ethereum’s DeFi Future on L2s? Liquidity, Innovation Say Perhaps Yes

Published

1 час ago

16 сентября, 2025

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Ethereum is in the midst of a paradox. Even as ether hit record highs in late August, decentralized finance (DeFi) activity on Ethereum’s layer-1 (L1) looks muted compared to its peak in late 2021. Fees collected on mainnet in August were just $44 million, a 44% drop from the prior month.

Meanwhile, layer-2 (L2) networks like Arbitrum and Base are booming, with $20 billion and $15 billion in total value locked (TVL) respectively.

This divergence raises a crucial question: are L2s cannibalizing Ethereum’s DeFi activity, or is the ecosystem evolving into a multi-layered financial architecture?

AJ Warner, the chief strategy officer of Offchain Labs, the developer firm behind layer-2 Arbitrum, argues that the metrics are more nuanced than just layer-2 DeFi chipping at the layer 1.

In an interview with CoinDesk, Warner said that focusing solely on TVL misses the point, and that Ethereum is increasingly functioning as crypto’s “global settlement layer,” a foundation for high-value issuance and institutional activity. Products like Franklin Templeton’s tokenized funds or BlackRock’s BUIDL product launch directly on Ethereum L1 — activity that isn’t fully captured in DeFi metrics but underscores Ethereum’s role as the bedrock of crypto finance.

Ethereum as a layer-1 blockchain is the secure but relatively slow and expensive base network. Layer-2s are scaling networks built on top of it, designed to handle transactions faster and at a fraction of the cost before ultimately settling back to Ethereum for security. That’s why they’ve become so appealing to traders and builders alike. Metrics like TVL, the amount of crypto deposited in DeFi protocols, highlight this shift, as activity is moved to L2s where lower fees and quicker confirmations make everyday DeFi far more practical.

Warner likens Ethereum’s place in the ecosystem to a wire transfer in traditional finance: trusted, secure and used for large-scale settlement. Everyday transactions, however, are migrating to L2s — the Venmos and PayPals of crypto.

“Ethereum was never going to be a monolithic blockchain with all the activity happening on it,” Warner told CoinDesk. Instead, it’s meant to anchor security while enabling rollups to execute faster, cheaper and more diverse applications.

Layer 2s, which have exploded over the last few years because they are seen as the faster and cheaper alternative to Ethereum, enable whole categories of DeFi that don’t function as well on mainnet. Fast-paced trading strategies, like arbitraging price differences between exchanges or running perpetual futures, don’t work well on Ethereum’s slower 12-second blocks. But on Arbitrum, where transactions finalize in under a second, those same strategies become possible, Warner explained. This is apparent, as Ethereum has had fewer than 50 million transactions over the last month, compared to Base’s 328 million transactions and Arbitrum’s 77 million transactions, according to L2Beat.

Builders also see L2s as an ideal testing ground. Alice Hou, a research analyst at Messari, pointed to innovations like Uniswap V4’s hooks, customizable features that can be iterated far more cheaply on L2s before going mainstream. For developers, quicker confirmations and lower costs are more than a convenience: they expand what’s possible.

“L2s provide a natural playground to test these kinds of innovations, and once a hook achieves breakout popularity, it could attract new types of users who engage with DeFi in ways that weren’t feasible on L1,” Hou said.

But the shift isn’t just about technology. Liquidity providers are responding to incentives. Hou said that data shows smaller liquidity providers increasingly prefer L2s where yield incentives and lower slippage amplify returns. Larger liquidity providers, however, still cluster on Ethereum, prioritizing security and depth of liquidity over bigger yields.

Aave TVL (Messari Dashboard/ Alice Hou)

Interestingly, while L2s are capturing more activity, flagship DeFi protocols like Aave and Uniswap still lean heavily on mainnet. Aave has consistently kept about 90% of its TVL on Ethereum. With Uniswap however, there’s been an incremental shift towards L2 activity.

Uniswap L2 activity (Dune dashboard/ Alice Hou)

Another factor accelerating L2 adoption is user experience. Wallets, bridges and fiat on-ramps increasingly steer newcomers directly to L2s, Hou said. Ultimately, the data suggests the L1 vs. L2 debate isn’t zero-sum.

As of September 2025, about a third of L2 TVL still comes bridged from Ethereum, another third is natively minted, and the rest comes via external bridges.

“This mix shows that while Ethereum remains a key source of liquidity, L2s are also developing their own native ecosystems and attracting cross-chain assets,” Hou said.

Ethereum thus as a base layer appears to be cementing itself as the secure settlement engine for global finance, while rollups like Arbitrum and Base are emerging as execution layers for fast, cheap and creative DeFi applications.

“Most payments I make use something like Zelle or PayPal… but when I bought my home, I used a wire. That’s somewhat parallel to what’s happening between Ethereum layer one and layer twos,” Warner of Offchain Labs said.

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CoinDesk 20 Performance Update: Avalanche (AVAX) Gains 4.6% as Index Moves Higher

Published

1 час ago

16 сентября, 2025

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CoinDesk Indices presents its daily market update, highlighting the performance of leaders and laggards in the CoinDesk 20 Index.

The CoinDesk 20 is currently trading at 4267.12, up 0.7% (+27.81) since 4 p.m. ET on Monday.

9am CoinDesk 20 Update for 2025-09-16: vertical

Eighteen of 20 assets is trading higher.

Leaders: AVAX (+4.6%) and NEAR (+2.9%).

Laggards: AAVE (-0.9%) and BCH (-0.2%).

The CoinDesk 20 is a broad-based index traded on multiple platforms in several regions globally.

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Santander’s Openbank Starts Offering Crypto Trading in Germany, Spain Coming Soon

Published

1 час ago

16 сентября, 2025

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The digital banking arm of Spanish financial giant Santander Group, Openbank, opened cryptocurrency trading for customers in Germany, with plans to add its home market in the next few weeks.

The new service allows users to buy, sell and hold five popular cryptocurrencies: bitcoin (BTC), ether (ETH), litecoin (LTC), polygon (MATIC) and cardano (ADA), according to a press release. The cryptocurrencies are available alongside stocks, ETFs and investment funds.

Customers can trade without moving funds to an external platform, keeping all investments in one place under Santander’s umbrella, the bank said.

“By incorporating the main cryptocurrencies into our investment platform, we are responding to the demand of some of our customers,” said Coty de Monteverde, head of crypto at Grupo Santander.

The bank charges a 1.49% fee per transaction, with a 1 euro ($1.2) minimum, and does not include custody fees. The bank said it plans to add more cryptocurrencies and new features, such as crypto-to-crypto conversions, in coming months.

Santander Private Bank was back in 2023 making headlines when it started letting clients with accounts in Switzerland trade BTC and ETH. It selected crypto safekeeping technology firm Taurus for custody.