SEC Says It Dropped Crypto Lawsuits to Prepare for Sweeping Policy Shift

The U.S. Securities and Exchange Commission said its decision to drop lawsuits against major crypto companies last year was aimed at preparing for a sweeping shift in regulatory policy.

SEC Commissioner Mark Uyeda, speaking at a financial markets conference at Georgetown University on Sept. 24, explained why the agency withdrew the cases it had brought against crypto firms last year. Continuing to pursue those lawsuits while the SEC was preparing a 180-degree turn in its regulatory approach could have damaged the agency's credibility, he said.

Uyeda also said there were serious doubts about whether the crypto-related lawsuits filed under the previous administration were legally justified. The agency wanted to avoid announcing a new policy while arguing the exact opposite position in court.

Uyeda served as acting SEC chair from January to April last year. During that period, the SEC dropped a series of lawsuits it had filed against major crypto companies including Kraken, Ripple Labs and Coinbase.

The decision drew criticism from some quarters as a reward for the crypto industry's support for President Donald Trump during the 2024 U.S. presidential election. During the campaign, Trump said he would fire former SEC Chair Gary Gensler on his first day in office over the agency's hard-line regulatory stance toward the crypto industry. Gensler resigned on the day Trump took office.

Vacancies in the SEC's leadership are also drawing attention. The agency is currently run by three commissioners: Chair Paul Atkins, Uyeda and Hester Peirce. Peirce is set to leave in November, which could leave the leadership with just two members, but Trump has yet to announce a successor.