SEC Drops Dragonchain Lawsuit in Latest Crypto Enforcement Reversal
"We finally have the right to innovate without fear,” says company founder
Welcome to the Friday edition of the Crypto In America newsletter! Wall Street’s top cop is backing off another crypto company, as its new crypto-friendly chairman prepares to make his first remarks at an industry roundtable this afternoon.
The Securities and Exchange Commission has reached an agreement with blockchain infrastructure firm Dragonchain, agreeing to drop its ongoing litigation against the company, Crypto In America has learned.
The move aligns with the SEC’s new approach to crypto under Republican leadership, which has seen the agency walk back many enforcement actions and investigations launched during the Biden administration—a period marked by an industry-wide crackdown led by former SEC Chairman Gary Gensler on crypto firms accused of offering unregistered securities.
“After seven years of injustice, we finally have the right to innovate without fear,” Dragonchain founder Joe Roets told Crypto In America in an exclusive interview on Thursday evening.
Dragonchain faced allegations related to a 2017 public sale of its native token, DRGN, which the SEC under Gensler deemed an unregistered offering of securities to investors.
In a joint filing Thursday, the SEC and Dragonchain asked the court to dismiss the 2022 lawsuit, citing the ongoing work of the agency’s Crypto Task Force. The task force, formed in January, is currently engaging with industry through a series of roundtables to provide guidance on how digital assets may—or may not—fall under federal securities laws.
“In light of the foregoing, and in the exercise of its discretion and as a policy matter, the Commission believes the dismissal of this case is appropriate,” the filing said.
Originally developed by Roets at Disney in 2014, Dragonchain is a hybrid blockchain platform that allows companies to run private blockchains while leveraging the security of public networks like Ethereum and Bitcoin.
The price of the DRGN token has surged by as much as 95% since news of the case’s dismissal broke on Thursday.
Paul Atkins to Make Remarks at Crypto Custody Roundtable
The newly appointed SEC Chair is set to address the crypto world this afternoon at the agency’s third industry roundtable on crypto trading. It will mark his first public remarks on digital assets since President Trump nominated him to the post in December.
Today’s event will focus on custody issues, featuring two panels — one on broker-dealer and wallet custody, and another on investment adviser and investment company custody. Panelists are set to include representatives from Kraken, Fireblocks, Fidelity, Wisdom Tree and others.
Watch it here at 1:00PM EST.
Weekly Recap
ICYMI. Here are some of the biggest news stories this week from the intersection of Washington and Web3:
Chair of the House Financial Services Committee told Crypto In America this week that the House spent “a good part of Easter break” working on seeking technical assistance from industry, the SEC and the CFTC for an updated draft of the lower chamber’s ‘FIT21’ market structure bill introduced last Congress. He says a discussion draft of the new legislation and a hearing on the text will come in the “coming short weeks.”
The Federal Reserve rescinded guidance issued under the Biden administration that required banks to receive approval before engaging in crypto or stablecoin activities.
Derivatives exchange CME Group announced it will launch XRP futures contracts on May 19, pending approval from the Commodity Futures Trading Commission.
Tether, SoftBank, and Cantor Fitzgerald are teaming up to launch 21 Capital, a $3.6 billion Bitcoin accumulation company. Strike CEO Jack Mallers will take the helm as CEO, with the firm aiming to go public through a SPAC merger with Cantor Fitzgerald’s Cantor Equity Partners.
Paul Atkins officially started his tenure as the 34th Chairman of the Securities and Exchange Commission. During his swearing-in ceremony at the Oval Office on Tuesday, Atkins pledged to work to protect investors from fraud, keep politics out of securities laws and provide a firm regulatory foundation for digital assets.
Trump Media finalized the deal it announced in March with crypto exchange Crypto.com and asset manager Yorkville America Digital to launch TruthFi ETFs, which will incorporate U.S. cryptocurrencies and American-made investments. The ETFs are expected to launch later this year, backed by up to $250M from Trump Media.
The Oregon Attorney General suing Coinbase is claiming around 31 crypto tokens including XRP, Cardano, Solana, ChainLink, and Uniswap were offered and sold by the exchange as illegal investment contracts under Oregon state law. The lawsuit, filed last week by Democratic AG Dan Rayfield, echoes the SEC’s 2023 case against Coinbase, dismissed in February, but goes further, classifying 18 additional tokens as “crypto securities.”
The SEC’s Division of Enforcement gave U.S. crypto firm Unicoin a deadline of April 18 to engage in settlement talks over allegations that the company knowingly violated both registration and antifraud provisions of federal securities law. But CEO Alex Konanykhin is refusing to take the bait, telling Eleanor Terrett he plans to fight the case in court and calling the regulator’s actions “grotesque.”
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I count six links in today's newsletter 😊, especially like the link to the 1:00 meeting.
Further, while others may provide valuable information, often those items come with "typos" or other spelling/grammar issues. I'm sure many don't care, but I do.
I'm not sure who is responsible for proofreading the newsletter, but it is as "tight" as can be.
Keep up the good research, reporting and presentation. 👍🏻