The U.S. Securities and Exchange Commission (SEC) has agreed in principle to dismiss its lawsuit against cryptocurrency exchange Kraken, according to a statement from the company.
The case will be dropped with prejudice, meaning it cannot be refiled. Kraken will not admit to any wrongdoing, pay penalties, or change its business operations.
The regulator also accused the company of commingling customer and corporate funds. Kraken contested the charges, leading a federal judge to rule the case had enough merit to proceed to trial.
The SEC sued Kraken in November 2023, alleging it operated as an unregistered securities exchange, broker, clearing agency, and dealer.
“The SEC’s lawsuit, which mischaracterized our consistent business model, was always without merit,” the company said.
But in a blog post released on March 3, the company described the regulator’s case as baseless and politically motivated, doubling down on their claim that “Regulatory actions must be based on facts, not political agendas.”
However, the exchange maintained that the lawsuit misrepresented its business and called the allegations politically motivated.
Kraken expressed optimism that the decision to drop the lawsuit may signal the end of an era marked by contentious legal battles between federal agencies and digital asset platforms, pointing to leadership changes in Washington as a key factor. “We appreciate the new leadership both at the White House and the Commission that led to this change,” said a representative from the crypto platform.
The SEC’s move to dismiss the case comes amid a broader shift in regulatory attitudes toward the cryptocurrency industry in the U.S.
Under former Chair Gary Gensler, the agency pursued lawsuits against major crypto firms, arguing that most digital assets were unregistered securities. Critics condemned this “regulation by enforcement” strategy, saying it stifled innovation and pushed businesses offshore while other countries established clearer rules.
Kraken’s victory marks a turning point in the SEC’s approach to crypto enforcement.
On February 27, it officially dismissed its case against Coinbase, further signaling a retreat from aggressive enforcement.
This shift aligns with President Donald Trump’s broader regulatory approach.
Now, the SEC is taking a different path. Since the change in leadership, the agency has dropped multiple lawsuits and investigations, including cases against Consensys, Uniswap, Robinhood, and OpenSea.