Federal court closes SEC’s Coinbase case with prejudice

Court closes a marquee crypto case

On February 28, 2025, U.S. District Judge Katherine Polk Failla closed the Securities and Exchange Commission’s civil enforcement case against Coinbase after the parties filed a corrected joint stipulation of dismissal.

Docket entry 178 in the Southern District of New York dismissed the litigation with prejudice as to conduct alleged in the SEC’s complaint through the filing date. The agreement assigned no costs or fees to either party, required Coinbase to withdraw its request for an interlocutory appeal and directed the clerk to terminate pending motions, cancel remaining dates and close the case.

The formal order completed a process the SEC had announced on February 27. An initial voluntary-dismissal entry filed on February 27 was marked deficient because the affected defendants had not been selected correctly in the court’s electronic filing system. The corrected filing identifying Coinbase Inc. and Coinbase Global Inc. entered the docket on February 28, and Failla signed the joint stipulation that day.

What the SEC had alleged

The SEC filed the case on June 6, 2023. Its complaint alleged that Coinbase operated its trading platform as an unregistered national securities exchange, broker and clearing agency. The agency also alleged that Coinbase’s staking program constituted an unregistered offer and sale of securities. Coinbase disputed those claims.

The litigation had not produced a final merits judgment. On March 27, 2024, Failla allowed most of the SEC’s registration claims to proceed while dismissing the claim involving Coinbase Wallet. On January 7, 2025, she certified an interlocutory appeal concerning how the Supreme Court’s investment-contract test applied to transactions in crypto assets and stayed the district-court proceedings.

That procedural history makes the February 28 dismissal important but narrower than a Coinbase victory after trial. The stipulation ended the case before an appellate court could address the disputed legal question and before the district court could determine liability.

A policy reversal, not new precedent

The SEC said it sought dismissal as a policy matter following the January 21 creation of its Crypto Task Force. According to the agency, ending the case would facilitate work on a clearer regulatory framework rather than continuing to express crypto policy principally through enforcement litigation.

The Commission also expressly separated the dismissal from the merits of its original allegations. It said the decision did not represent an assessment of those claims and did not necessarily state the SEC’s position in any other case. The order therefore did not declare that Coinbase-listed assets were categorically outside securities law, approve Coinbase’s staking program or create a binding rule for other platforms.

For the industry, the immediate consequence was still substantial. One of the SEC’s highest-profile attempts to apply exchange, broker and clearing-agency registration requirements to a major U.S. crypto venue ended without a penalty or operational injunction. At the same time, the dismissal removed a possible route to appellate guidance, leaving Congress, regulators and future courts to address the unresolved classification questions.

Markets sent a separate signal

The favorable regulatory development coincided with severe market weakness rather than a broad rally. In a dispatch published at 09:00 IST on February 28, Reuters reported that bitcoin’s spot price in U.S. dollars was last down more than 5% at $79,666, below $80,000 for the first time since November 11, 2024.

That figure was an intraday news snapshot, not an official closing price. Bitcoin trades continuously across venues, and Reuters did not identify a single exchange or UTC candle boundary for the quotation. The simultaneous court action and selloff should not be treated as evidence that one caused the other; contemporaneous reporting also identified tariff uncertainty, exchange-traded-fund withdrawals and the February 21 Bybit theft as pressures on sentiment.

As of February 28, the verified conclusion was limited but consequential: the SEC’s case against Coinbase was closed with prejudice, while the broader legal status of many crypto transactions remained unsettled.