SEC Drops Lawsuit Against Crypto Influencer Balina Amid Policy Shift

The US Securities and Exchange Commission (SEC) has decided to drop its lawsuit against crypto influencer Ian Balina. This move is part of a broader trend of reduced crypto enforcement under the Trump administration. Balina was accused of promoting unregistered securities through an investment pool involving Sparkster (SPRK) tokens. The SEC also concluded its investigation into PayPal’s stablecoin PYUSD, deciding not to take any enforcement action. Despite this regulatory clearance, PYUSD remains a minor player in the market with a market cap of under $1 billion.

Balina, the CEO of Token Metrics and a prominent figure in the crypto space with a significant following, was initially sued by the SEC in 2022. The complaint centered around his involvement in an investment pool using Sparkster (SPRK) tokens during the 2018 initial coin offering (ICO) craze. The SEC argued that Balina’s actions constituted an unregistered securities offering, with US-based investors participating through a network of Ethereum nodes predominantly located in the US. In May 2024, a court ruled that SPRK qualified as an investment contract, falling under US securities law. However, the SEC has since rolled back numerous enforcement actions following President Donald Trump’s appointment of former crypto lobbyist Paul Atkins as the agency’s chair. Balina suggested that the case’s dismissal was due to a reorientation of agency priorities and described the new administration as “pro-crypto.”

The SEC and Balina jointly stated that dropping the case would preserve court resources and would not involve any costs or fees to either party. This dismissal is part of a series of abandoned actions against major crypto entities, including Coinbase, Ripple, Kraken, and OpenSea. The SEC’s decision to drop the case against Balina reflects a shift in regulatory priorities, potentially signaling a more lenient approach towards crypto enforcement under the current administration.

Meanwhile, legal accountability continues to be pursued for other individuals involved in the crypto space. Avraham Eisenberg was sentenced to over four years in prison for unrelated criminal charges. Further sentencing is pending for his $100 million Mango Markets exploit. Eisenberg was arrested in Puerto Rico in December 2022 and is also facing conviction for orchestrating a high-profile exploit of Mango Markets, a decentralized crypto exchange. In October 2022, Eisenberg used a price oracle manipulation tactic to drain approximately $100 million in user funds, causing the exchange’s native token, MNGO, to lose more than half its value in a day. The attack prompted Mango Markets to suspend deposits and attempt recovery. Eisenberg defended his actions as legal trading strategies and claimed to have negotiated a settlement with the exchange to return part of the stolen funds. However, federal authorities charged him with commodities fraud and manipulation, and in April 2024, a jury found him guilty of wire fraud, commodities fraud, and commodities manipulation. His legal team argues that his actions did not constitute cybercrime but rather skillful trading, and have filed a motion for acquittal. Prosecutors maintain that the conviction was supported by overwhelming evidence, highlighting the increasing accountability for those exploiting vulnerabilities in the crypto industry.