SEC drops 7 crypto cases, citing misread of securities law

The U.S. Securities and Exchange Commission (SEC) on April 7 acknowledged errors in applying federal securities law to certain crypto matters and dismissed seven enforcement actions. The dismissals cover cases involving Coinbase, Binance, Kraken (Payward), Consensys Software, Cumberland, Dragonchain and Ian Balina. The agency cited an absence of direct investor harm and a misallocation of resources.

In a public statement, the regulator described parts of its prior approach as “a misinterpretation of the federal securities laws.” The statement recounted 95 actions that yielded $2.3 billion in penalties for book-and-record violations and noted that, together with seven registration cases and six disputes over the “definition of a dealer,” those matters “identified no direct investor harm from those violations, [and] produced no investor benefit or protection.” It also pointed to an internal bias favoring case volume over measurable investor safeguards.

According to the agency, seven crypto-related cases have been dropped since February 2025. The SEC indicated it is redirecting enforcement resources after reassessing how existing statutes apply to digital assets. “In fiscal year 2025, the Commission made a necessary course correction in its approach to enforcing the federal securities laws in the context of crypto assets,” the statement reads.

The change comes amid a broader policy shift by the current administration. Paul Atkins, who became SEC chair in April 2025, has criticized prior leadership’s handling of crypto issues, calling it a “big missed opportunity.”

In January, the SEC and the Commodity Futures Trading Commission launched Project Crypto, a joint initiative to modernize crypto oversight and provide clearer rules. The agencies issued guidance last month stating that most digital assets are not securities. “After more than a decade of uncertainty, this interpretation will provide market participants with a clear understanding of how the Commission treats crypto assets under federal securities laws,” Atkins noted at the time.

Atkins has advanced a safe harbor proposal described as a startup exemption that would allow crypto projects to raise capital within defined disclosures and time-limited conditions. The draft is now with the Office of Information and Regulatory Affairs for review.

The SEC’s reassessment follows years of actions hinging on whether crypto assets or related activities met existing securities definitions, including broker-dealer and exchange registration and recordkeeping. The Commission indicated it is moving away from cases where no direct investor harm is identified and where penalties do not yield discernible investor benefit. Coordination with the CFTC through Project Crypto will continue as the agency updates guidance and evaluates exemptions within current law.