SEC Drops Dragonchain Lawsuit, Part of Broader Crypto Regulatory Shift

The US Securities and Exchange Commission (SEC) has filed a joint stipulation with Dragonchain, indicating its intention to drop the securities lawsuit against the blockchain firm. This move is part of the SEC's ongoing efforts to develop a regulatory framework for crypto assets, as highlighted by the work of its Crypto Task Force. The stipulation, submitted on April 24 in a Seattle federal court, states that the dismissal of the case is deemed appropriate by both the SEC and Dragonchain. The lawsuit, initially filed in August 2024, accused Dragonchain, its backer the Dragonchain Foundation, The Dragon Company, and founder Joseph Roets of raising $16.5 million through an unregistered securities offering via the DRGN token.

The SEC's allegations centered around the August 2017 presale and the subsequent initial coin offering (ICO) in October and November of the same year, which collectively raised $14 million. The regulatory body asserted that the tokens constituted investment contracts under securities laws, necessitating registration. Additionally, the SEC claimed that a further $2.5 million worth of DRGN tokens were sold between 2019 and 2022, with the proceeds used to cover business expenses and develop the firm’s technology.

The lawsuit was temporarily halted in October 2024 following a settlement offer from Dragonchain, which was extended in January 2025. The extension was prompted by an executive order from then-President Donald Trump, calling for the country’s leadership in digital assets. This order led to a pause in the case, allowing for further discussions and potential resolutions.

The SEC's decision to drop the lawsuit against Dragonchain is part of a broader trend under the Trump administration, where the regulatory body has shown a willingness to back off from high-profile crypto cases. The SEC's Crypto Task Force, established in January 2025, has been instrumental in leading the regulator’s engagement with the crypto industry. This task force met with Dragonchain representatives on March 24 to discuss regulatory approaches for crypto assets. The SEC has also dismissed lawsuits against other prominent crypto firms, including Coinbase, Ripple, and Kraken, and has dropped investigations into firms like OpenSea, Crypto.com, and Immutable, with no further action planned. This shift in regulatory stance has left key questions unanswered regarding the future of crypto regulation in the United States.