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Three States Withdraw Lawsuits Against Coinbase Following SEC

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Three States Withdraw Lawsuits Against Coinbase Following SEC

  • Kentucky, Vermont, and South Carolina have withdrawn their lawsuits against Coinbase in alignment with the SEC.

  • The SEC had previously closed its case against the cryptocurrency platform earlier in February 2025.

  • Seven other states continue to support a collective lawsuit regarding Coinbase’s Earn program, claiming it violates federal securities law.

  • Coinbase’s CLO has called on Congress to pass legislation for better federal oversight of crypto assets.

Regulators Withdraw Lawsuits Against Coinbase

In a significant development within the cryptocurrency market, regulators from Kentucky, Vermont, and South Carolina have decided to withdraw their legal actions against Coinbase. This move follows the lead of the U.S. Securities and Exchange Commission (SEC), which ended its lawsuit against the platform in February 2025. The decisions made by these states represent a crucial shift in how regulators are approaching issues related to the crypto industry.

Details on State Decisions

The financial regulator in Kentucky officially withdrew its case on March 31, 2025. Similarly, South Carolina and Vermont took action on March 26 and March 13 respectively. Despite these withdrawals, seven other states remain committed to their legal proceedings against Coinbase due to concerns about its Earn program.

The Controversy Surrounding Coinbase’s Earn Program

The legal controversy centers around Coinbase’s Earn program. Regulators argue that this initiative involves staking crypto assets that amount to an unregistered offering of securities under federal law. Despite these claims, Coinbase has refused to discontinue the program.
Coinbase’s Chief Legal Officer Paul Grewal has publicly urged Congress to enact legislation concerning crypto assets. Such laws would ideally address regulatory inconsistencies and ensure federal oversight rather than state-based supervision.

The Broader Regulatory Landscape

The withdrawal of lawsuits by three states indicates a potential shift in regulatory strategies toward cryptocurrency companies like Coinbase. The SEC itself has pivoted significantly after recent governmental changes in the U.S., choosing to drop several cases targeting crypto platforms.
Earlier reports highlighted that Brian Armstrong, CEO of Coinbase, advocates for allowing stablecoin issuers to distribute profits as interest among asset holders—an example of ongoing discussions about regulatory frameworks needed for digital currencies.
As these developments unfold, they underscore an evolving landscape where both state and federal entities are re-evaluating their stances towards cryptocurrencies and blockchain technologies.
This evolving situation not only reflects changes within regulatory bodies but also highlights the importance of clear legislative guidelines that adapt alongside technological advancements within the financial sector.

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