SEC's Crypto U-Turn: Dismissals Raise Questions, Ripple Case Lingers

The U.S. Securities and Exchange Commission (SEC) has been actively dismissing high-profile investigations and enforcement actions related to cryptocurrencies in recent weeks. This trend has raised questions about the agency's enforcement priorities and its approach to regulating the crypto industry. One notable exception to this trend is the ongoing case involving Ripple and its XRP token.

Ripple's legal battle with the SEC began in late 2020 and has yet to reach a conclusion. Some legal experts, such as attorney James Murphy, have speculated that the SEC's unexplained delay in dismissing the case could be due to Ripple's negotiations to vacate Judge Torres' ruling. This theory suggests that Ripple is "negotiating hard" to lift an SEC-imposed injunction on XRP sales, further delaying the lawsuit's dismissal.

The SEC's recent dismissal of its enforcement action against Coinbase on February 27, 2025, has also drawn attention. The Commission stated that the dismissal would facilitate its ongoing efforts to reform and renew its regulatory approach to the crypto industry. This move has raised questions about the SEC's evolving priorities and its approach to regulating the crypto industry.

While the SEC has been backing off from some crypto cases, it has not entirely abandoned its enforcement efforts. The Commission's Cyber and Emerging Technologies Unit, which investigates and prosecutes fraud cases involving blockchain technology and crypto assets, remains active. The outcome of the SEC's case against Binance, which is also on pause, will be an interesting development to watch.

The crypto community continues to await further guidance from the SEC on the application of federal securities laws to crypto assets. The formation of the Crypto Task Force, dedicated to developing a comprehensive and clear regulatory framework for crypto assets, has been a promising development. However, it remains to be seen how the Commission will resolve the ongoing legal disputes and provide clarity for the industry.