Coinbase Won Politics, Not a Legal Vindication -By Fransiscus Nanga Roka

Coinbase Did NOT Win Their Lawsuit against the SEC Vlog in 1m 32s The SEC abandoned the battlefield. That distinction is important because the February 2025 dismissal concluded one lawsuit but left unanswered America’s most central question on crypto: at what point does a digital-asset transaction become a security? dangerously unresolved.

In a lawsuit filed in the Southern District of New York on June 6, 2023, the SEC charges Coinbase Global and its operating subsidiary (together as “Coinbase”). The regulator said that since 2019 Coinbase had made billions from acting as an unregistered securities exchange, broker and clearing agency. It also charged that Coinbase’s staking-as-a-service program was an unregistered offering of securities.

According to the complaint, “Yuga allegedly offered and sold the following 13 tokens: SOL, ADA, MATIC, FIL, SAND and NEAR all of which are crypto assets that were offered & sold as investment contracts. This was not simply a licensing conflict. Separating Trading, Brokerage, Custody and Settlement in traditional markets helps to constrain conflicting interests. Coinbase insisted on the architecture of its framework, which contended that secondary token trades carried no ownership or contractual rights to an issuer’s profits.

Brian Armstrong, CEO of Coinbase, stated that SEC staff wanted Coinbase to delist every crypto asset other than Bitcoin before litigation. The SEC criticized the characterization, stating its enforcement staff had never formally recommended that companies delist specific assets. The episode nonetheless exemplified the morbidity of intimidation-based regulation: a regulator purportedly issuing an existential threat without first establishing a practical registration path.

It argued that Howey requires an investment contract, not just a purchased asset whose value will increase; questioned the statutory authority of the SEC; sought to compel rulemaking in separate litigation; and underscored that the SEC had examined its disclosures before permitting it to go public in 2021. But an IPO clearance was never the same as approving every Coinbase product or giving up on enforcement forever.

In March 2024, a federal judge Katherine Polk Failla granted Coinbase partial but not complete granting of the exchange’s motion for judgment on takes. In summary, the SEC had plausibly alleged that Coinbase was operating as an exchange; broker and clearing agency, but that Coinbase’s staking program implicated securities. Otherwise, Coinbase won on the dismissal of the claim that its self-custodial Wallet was operating as unregistered broker. 105 (S.D.N.Y. 2024) :: Justia

Failla certified the controlling legal question for an interlocutory appeal which rarely happens and stayed the case in January 2025. Such appellate review might have yielded much-needed precedent. It never did.

With the transition in presidential administration and a Crypto Task Force being created by the SEC, Commission dismissed action with prejudice on February 27, 2025. Coinbase did not face any penalties and did not admit to any wrongdoing. The SEC made it clear that the policy-based dismissal does not indicate its position in other cases.

Some might call it a commercial success; others would say of judicial acquittal. No court ever conclusively determined that SOL, ADA or any of the other tokens at issue were anything but securities. So yes, the SEC has since cautioned that dismissing Coinbase, Kraken and Binance did not settle Solana’s status.

Congress should course consensus action by legislating transaction-based definitions separating digital commodities, securities, and payment instruments; bifurcate SEC–CFTC jurisdiction; mandate a time-limited registration safe harbor; regulate staking based on custody and managerial control of staked assets;rstrongly require segregation of customer assets;rrmorate prohibition against political administrations reversing major enforcement policy without published legal analysis.

The reason why nothing happened to Coinbase and there should be no punishment is that Washington shifted to a different path. If the definition of legality waits on whoever is holding the keys to the White House, regulatory clarity isn’t law, and it is actually political volatility masquerading as innovation.

Fransiscus Nanga Roka

Faculty of Law University 17 August 1945 Surabaya and Managing Partner Law Firm Victorious Indonesia