Resolution of Biden-era Crypto Enforcement Actions

One of the biggest Biden-era crypto enforcement actions may soon reach resolution. The SEC recently stated that its new crypto task force “may affect and could facilitate the potential resolution” of the agency’s lawsuit against crypto exchange Coinbase.

The lawsuit, first filed in 2023, was escalated to the Second Circuit last month following Coinbase’s successful motion for an interlocutory appeal.

The SDNY (the federal court that handled SBF’s trial and other ongoing crypto matters) determined that a higher court needs to address a key question: Do intermediated crypto transactions involve investment contracts (i.e., transactions made on an exchange)?

If the answer is yes, it implies that crypto exchanges are facilitating securities transactions, which would pose a problem.

A ruling from the Second Circuit on this matter would bring much-needed clarity to the crypto space. Currently, one of the main issues with crypto regulation and enforcement is the varying stances taken by district court judges, even within the same district.

An appeals court ruling would establish concrete precedent for future cases. However, the appeals process can be lengthy and costly, with either party having the option to appeal to higher courts if unsatisfied with the outcome.

Conversely, a decisive crypto policy statement from the SEC could also be favorable, but its reception may vary within the industry.

With numerous potential outcomes on the horizon, we’ll have to wait and see how it all unfolds.