The United States Securities and Exchange Commission (SEC) has withdrawn its lawsuit against blockchain firm Dragonchain, marking a major shift in crypto regulation. This decision, driven by the SEC’s new Crypto Task Force, hints at a friendlier approach to digital assets, sparking hope for innovation.
The Case and Its Conclusion
In August 2022, the SEC sued Dragonchain, its founder Joseph Roets, and related entities, alleging they raised $16.5 million through an unregistered securities offering via a 2017 initial coin offering (ICO). The SEC claimed Dragonchain’s DRGN tokens were securities under the Howey Test, requiring registration. The agency pointed to a presale and ICO that collected $14 million, plus $2.5 million sold later for business costs.
Dragonchain argued that its tokens were utility licenses, not investments, and criticized the SEC for outdated regulations. The case dragged on until April 24, 2025, when both parties filed a joint motion to dismiss it in a Seattle federal court. The SEC, citing its Crypto Task Force’s work to rethink crypto rules, dropped the case with prejudice, meaning it cannot be refiled.
A Shift Towards Regulatory Tolerance
The withdrawal signals a softer SEC stance under new leadership and a pro-crypto Trump administration. The Crypto Task Force, formed in January 2025, aims to clarify which digital assets fall outside securities, like memecoins, encouraging innovation. Roets, Dragonchain’s founder, celebrated the outcome, saying it grants the “right to innovate without fear.”
The SEC’s move is in line with recent dismissals of high-profile cases. For example, last month, the U.S. SEC officially agreed in principle to dismiss its lawsuit against Coinbase, a leading crypto exchange. Others like Ripple, OpenSea, Crypto.com, and Kraken have also benefited from this regulatory shift. These reversals suggest a shift from the SEC’s aggressive “regulation by enforcement” approach under former Chair Gary Gensler.
While uncertainty persists, these developments hint at a more stable crypto market, potentially attracting institutional investment and boosting growth. Stakeholders await further guidance from SEC roundtables, with Chair Atkins set to address the crypto community.
