In a stunning reversal, the SEC has dropped its lawsuit against cryptocurrency exchange Kraken, dismissing the case with prejudice. The decision, announced March 3, 2025, marks a complete about-face for the regulator that had aggressively pursued the company since November 2023. No fines. No admission of wrongdoing. Nothing.
This isn’t Kraken’s first rodeo with the SEC. Just last year, the exchange paid a hefty $30 million settlement over its staking services and shut down those operations for US customers. This time? They walked away clean.
The dismissed lawsuit had accused Kraken of operating as an unregistered securities exchange, broker, dealer, and clearing agency. Pretty serious stuff. But apparently not serious enough to follow through on.
Kraken wasted no time throwing shade, calling the original lawsuit “without merit” and “politically motivated.” They’ve maintained the same business model throughout and seem pretty smug about being vindicated. Can’t really blame them.
The dismissal isn’t happening in isolation. It’s part of a wave of SEC retreats, including dropped cases against Coinbase and Consensys. With the case dismissed with prejudice, any future SEC administration will be unable to refile the same lawsuit. Looks like the “regulation by enforcement” strategy is officially dead.
Funny how a new administration with a pro-crypto stance changes things. With former SEC Chair Gary Gensler out the door, the new leadership is clearly charting a different course. They’ve even formed a crypto task force aimed at creating actual policies instead of just slapping companies with lawsuits. What a concept.
For the broader crypto industry, this is huge. The uncertainty cloud that’s been hanging over businesses is starting to clear. Companies might actually be able to innovate without fear of random enforcement actions.
The SEC’s original allegations also included claims of commingling customer funds with Kraken’s own company assets, which could have posed significant financial risks to users.
The future looks brighter for crypto regulation. Instead of playing whack-a-mole with exchanges, regulators seem ready to engage with the industry and develop sensible rules. Kraken can now continue offering its smart contract services that power numerous DeFi applications across the ecosystem. Maybe, just maybe, the US might become a crypto-friendly place after all.
