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SEC Poised to Drop Coinbase Lawsuit, Marking Big Moment for U.S. Crypto

Published

1 день ago

21 февраля, 2025

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The U.S. Securities and Exchange Commission will vote soon on a deal negotiated with Coinbase to entirely drop the agency’s legal pursuit of the crypto exchange, according to the company’s top lawyer.

While the SEC has been making moves almost daily to reverse past positions on digital assets, the pending vote would mark a watershed moment that could start a series of legal dominoes to free other crypto businesses from enforcement actions. Because the deal between Coinbase and SEC staff assumes a dismissal of the case «with prejudice,» said Coinbase Chief Legal Officer Paul Grewal, the regulator’s accusations of securities violations would be shut down permanently.

«It’s a great day for Coinbase, yes, but it’s also a great day for crypto in America,» Grewal said in an interview with CoinDesk. «We have every expectation, based on representations that have been made to us, that that approval will come, and with that, the dismissal will then be filed.»

He restated it in simpler terms: «We win; they lose.»

When the SEC first went after Coinbase — the most prominent of the U.S.-based crypto platforms — it represented a shot across the bow of the industry. The SEC alleged Coinbase violated federal law by not registering as a clearing house, broker or trading venue, based on the agency’s view of the so-called Howey test that determines whether an asset is a security. The company chose to fight the accusations in federal court, and that legal clash had been fierce, most recently seeing a judge side with Coinbase’s effort to elevate an appeal of the central question at dispute: Are these tokens being traded really securities under the SEC’s jurisdiction?

The industry had long expected it might have to wait for the courts — eventually even the U.S. Supreme Court — to rule on former SEC Chair Gary Gensler’s assertion that most tokens are actually crypto securities. But the surrender of the SEC in this dispute is likely to be echoed in other cases, which would put the final word on the legal definition into the hands of Congress.

So, the commission vote could throw the industry’s major focus toward lobbying instead of legal wrangling.

The enforcement meetings for the SEC — currently made up of Acting Chairman Mark Uyeda, Republican Commissioner Hester Peirce and Democrat Commissioner Caroline Crenshaw — typically take place on Thursdays, so the final decision on the staff recommendation may be delayed as long as a week. Crenshaw has been a vocal skeptic of the digital assets industry and its compliance, so it remains unclear whether she’d be willing to sign off on the dismissal.

The SEC didn’t immediately respond to a request for comment on the agreement.

SEC allies

Uyeda and Peirce, who was named the head of the agency’s new Crypto Task Force, had long been sympathetic to the digital assets industry’s contention it was being mishandled by the SEC. Once Donald Trump was sworn in as president, he gave the agency’s gavel to Uyeda on an interim basis, and Uyeda began making swift moves to shift its course on crypto. This is the latest and — assuming a yes vote — arguably the most significant of the changes so far.

Eventually, former Commission Paul Atkins will take over after he secures a Senate confirmation. But Uyeda and Peirce both served Atkins as counsels during his tenure at the SEC, so Atkins is generally expected to follow the same path on crypto that Uyeda is already clearing.

Earlier this week, the agency shifted its enforcement unit — once laser-focused on crypto — to a wider responsibility over «emerging technologies,» suggesting a withdrawal from the era of heavy attention on crypto cases. It also dropped its appeal in the fight to defend its effort to force a wide swath of crypto activity into its recent rule to expand the definition of what makes a «dealer» under SEC oversight.

In another marquee crypto case, the regulator recently asked to hit pause on the Binance enforcement dispute. Those accusations of securities-law violations overlapped to some degree with the complaint against Coinbase, though the Binance suit also included accusations of fraud and conflicts of interest.

The SEC had similarly signaled last week that something was brewing with Coinbase when it asked for a delay in court proceedings, suggesting negotiations were underway toward a resolution and signaling the agency’s new crypto task force would help the enforcement team come up with a «potential resolution.»

The vote

In the coming days, lawyers across the industry will watch the SEC’s Coinbase vote, and then the judge’s response in the U.S. District Court for the Southern District of New York. If the SEC formally backs off the accusations Coinbase improperly listed unregistered securities, it’ll have to do the same in any similar cases.

«I’m hopeful that our getting this case dismissed will offer up a template for other cases to be resolved as well,» Grewal said. «And if that were the case, we’d be delighted, because we felt that Gary Gensler’s entire campaign against crypto was a distortion — frankly, an abuse — of legal process.»

As the agency continues to resolve past actions, it’s signaled that the future intention is to focus on fraud over compliance disagreements. And Uyeda said as recently as Thursday that the SEC’s new task force will be guiding its enforcement.

«One focus of this task force will be to ensure that we deploy enforcement resources judiciously,» he said at an event in Washington.

Grewal acknowledged the next priority quickly becomes U.S. legislation that can establish clear regulations at the federal level. To that end, Coinbase has been among the leading crypto companies delving into the political arena, deploying tens of millions of dollars in the 2024 elections (through the Fairshake PAC) to secure a friendlier Congress. One in 10 members of this Congress were boosted by Fairshake ads in their campaigns last year.

«We’ve seen Congress announce its commitment to legislation as early as the first 100 days,» Grewal noted. «So we’re very eager, with this cloud now lifted, to focus our full attention on getting legislation passed on market structure and stablecoins. That is, frankly, long overdue.»

UPDATE (February 21, 2025, 13:11 UTC): Adds request to SEC for comment.

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Ether Supply Squeeze? Bybit Hacker Emerges as World’s 14th-Largest ETH Holder

Published

2 часа ago

22 февраля, 2025

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The Bybit hacker, supposedly a North Korean entity, is now one of the world’s largest ether holders, which may have bullish implications for the cryptocurrency’s spot price.

According to data from Arkham Intelligence and Coinbase executive Connor Grogan, this malicious actor holds 489,000 ETH, valued at approximately $1.34 billion, constituting about 0.4% of ether’s total supply, making it the 14th-largest Ether holder globally. That puts the hacker ahead of the Ethereum Foundation, Ethereum’s CEO Vitalik Buterin and Fidelity.

It’s important to note that the addresses linked to this entity are being closely monitored and backlisted by exchanges, which means the hacker will likely struggle to offload these coins in the market.

In simpler terms, the hacked ether supply is likely lost permanently. Furthermore, Bybit, which has reportedly secured a bridged loan from unnamed partners to cover nearly 80% of the ether lost in the Friday hack, will likely need to purchase coins in the market.

«As far as this supply is concerned, it’s essentially gone. No OTC desk or exchange will facilitate the movement of such a large amount. Meanwhile, Bybit is short 402k ETH. The bridge loan may cover immediate needs, but purchasing will still be necessary,» Vance Spencer, co-founder of the crypto VC firm Framework Ventures, said on X.

That probably explains why ether has bounced 2.6% to $2,730 from the overnight low of around $2,614. Funding rates in perpetual futures tied to ether remain positive, implying a bias for long positions, according to data source Coingecko.

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Crypto Exchanges Start to Fill Bybit’s $1.4B Hole as Hackers Move Stolen Funds

Published

6 часов ago

22 февраля, 2025

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Crypto exchange Bitget has transferred 40,000 ether (ETH), worth $105 million, to Bybit, offering crucial support to its industry counterpart in the wake of the over billion-dollar hack suffered by the exchange.

The funds transferred are from Bitget’s own reserves, not user deposits, which remain securely stored on the platform and can be cross checked through the proof of reserves, the exchange’s CEO, Gracy Chen, said in a note shared with CoinDesk, while assuring more support if needed.

«At Bitget we strongly believe in supporting the community and everyone contributing towards the growth of crypto,» Chen said.

A suspected North Korean entity drained approximately $1.4 billion in ether from Bybit on Friday. The hack prompted an unprecedented wave of withdrawal requests from users, with the exchange successfully processing 99% of them, effectively facing a significant market stress test.

Part of the stolen funds started to move during Asian afternoon hours on Saturday with over 5,000 ETH moved through eXch mixer — a service that masks wallet address — before being sent to bridge protocol ChainFlip where the stash was converted to bitcoin (BTC).

In an X post, ChainFlip said it couldn’t block fund movements as it was a fully decentralized applications that relies on automated smart contracts, but that it had «turned off some frontend services to stop the flow.»

On the other hand, Bitget has blacklisted wallets tied to the hacker that drained ether worth millions from Bybit on Friday.

«We will block any transactions flowing in from illicit addresses to the exchange once it has been monitored. Our team of security, and researchers, are currently tracking these activities,» Chen said.

Despite the hack, Bybit had managed to process over 350,000 withdrawal requests and has since restored normal withdrawal operations, per an X post.

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Arthur Hayes Proposes Rolling Back Ethereum Network to Negate $1.4B Bybit Hack

Published

8 часов ago

22 февраля, 2025

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Arthur Hayes, BitMEX co-founder and major ether (ETH) holder, asked Ethereum co-founder Vitalik Buterin to rollback the network in order to assist hacked exchange Bybit, which lost nearly $1.4 billion in ether (ETH) on Friday.

«@VitalikButerin will you advocate to roll back the chain to help @Bybit_Official. My own view as a mega $ETH bag holder is $ETH stopped being money in 2016 after the DAO hack hardfork. If the community wanted to do it again, I would support it because we already voted no on immutability in 2016 [wh]y not do it again?» Hayes said on X.

Buterin was yet to reply as of time of publication.

The Bybit hack came into light on Friday when on-chain analyst ZachXBT noted suspicious outflows of over $1.4 billion from the exchange, with the attacker quickly swapping mETH and stETH for ether through a decentralized exchange.

The attacker then split 10,000 ETH to 39 different addresses and another 10,000 ETH to nine addresses, Gautham Santhosh, co-founder of Polynomial.fi, explained on X.

Bybit CEO Ben Zhou said that the hacker «took control of the specific ETH cold wallet and transferred all the ETH in the cold wallet to this unidentified address.» Zhou confirmed that the exchange «is solvent even if this hack loss is not recovered.»

One of the potential ways to address hacking is to roll back the blockchain. It involves reverting the blockchain to a state before the occurrence of a specific event, in this case, the hack. That way, malicious transactions resulting from the hack can be erased, effectively restoring lost or stolen funds. Implementing a rollback requires consensus from the network participants.

For instance, in 2016, the Ethereum network was rolled back using a hard fork to reverse a theft of $60 million in ether from The DAO (30% of all ETH in circulation back then). The hard fork split the chain into two – Ethereum and Ethereum Classic.

In 2019, Binance’s CEO Changpeng Zhao and his team considered pushing for a rollback on the Bitcoin network following a $40 million hack. However, the Bitcoin mining community criticized the idea of going back against the principle of decentralization and immutability, which are fundamental to blockchain technology.

Immutability is a security feature that prevents data from being changed after it’s added to the blockchain to make it trustworthy and tamper-proof. There are similar concerns regarding a potential Ethereum rollover.

«I wish we could roll back for the Bybit hack, I’m not against the idea. But the DAO hack was 15% of ETH with a clean recovery path. Today, a rollback would break bridges, stablecoins, L2s, RWAs and so much more. ETH ecosystem is just too interconnected now for a clean solution like 2016,» Santhosh said.

Sina 21st Capital explained that Ethereum is now stuck between a rock and a hard place.

«Ethereum is toast. They can roll back the chain and destroy what is left of the decentralization claim or allow North Korean baad actors to keep $1.4B of ETH and unleash an eternal internal battle. Either way, it is terrible,» Sina 21st Capital said on X.

Ether has dropped nearly 3% in 24 hours, but continues to trade rangebound between $2,600 and $2,800, CoinDesk data show.