SEC Crypto Cases on Hold While Task Force Eyes Broad Overhaul

The SEC’s nascent crypto agenda under President Donald Trump has prompted the agency to slam the brakes on pending litigation involving digital asset exchanges, with agency lawyers filing bids to delay or toss proceedings in at least four cases this month.

The Securities and Exchange Commission is citing a new crypto task force helmed by Commissioner Hester Peirce, a frequent dissenter in Biden-era crypto enforcement actions, as a factor that could “impact and facilitate the potential resolution” of cases involving exchanges Coinbase Global Inc., Binance Holdings Ltd., and Lejilex.

In a fourth case, the SEC on Wednesday moved to dismiss its appeal against the Crypto Freedom Alliance of Texas and the Blockchain Association over whether crypto firms should be tagged as securities “dealers.”

The month-long to 60-day extensions sought in several cases don’t guarantee the SEC intends to drop or settle all crypto-related litigation. Instead, they provide a grace period for the agency to gain its footing and establish a regulatory regime around crypto that dictates a path forward in existing cases.

“You can’t dismiss or let go of every single open matter that involves a company with exposure to crypto just because it uses the buzzword,” said Braeden Anderson, founding attorney at Anderson PC who specializes in securities enforcement. “There has to be a thoughtful review.”

Trump said Wednesday at an investment summit in Miami backed by Saudi Arabia’s sovereign wealth fund that he’s “committed to making America the crypto capital.” The SEC delays align with the likelihood of its current leadership and Trump’s pick for a full-time chairman, Paul Atkins, embracing a regulatory setup that affirmatively backs crypto trading.

Regulators must contend with the high volume of case law that has been established holding that digital assets are securities under the SEC’s purview.

“I’ve never seen anything like these pauses. I certainly never did a pause when I was there,” said John Reed Stark, a cybersecurity consultant and former chief of the SEC’s Office of Internet Enforcement. “The linchpin of SEC jurisdiction is whether something is a security or not, and there’s dozens and dozens of cases now that say digital assets are securities, so now they’re stuck.”

‘Beginning of the End’

The SEC’s bids to delay litigating crypto-related cases while setting up a new regulatory framework for digital assets are a gradual step toward scaling back crypto as an enforcement priority, according to Stark.

“Instead of ripping the Band-Aid off, they’re pulling it off slowly,” he said. “This is the beginning of the end of all crypto enforcement.”

The Trump administration sent a clear signal to the SEC this week, signing an executive order Feb. 18 to rein in independent federal agencies by requiring that they submit draft regulations for review and consult the White House on priorities and strategic plans.

SEC leadership sent its own initial message on crypto enforcement by reassigning Jorge Tenreiro, former chief litigation counsel and former acting chief of the SEC’s Crypto Asset and Cyber Unit, to the Office of Information Technology, as reported by The Wall Street Journal. The agency announced on Thursday that it had fully replaced the crypto team with a new Cyber and Emerging Technologies Unit comprising 30 fraud specialists and attorneys across SEC offices.

“The decisions in crypto have taken just three or four years to develop into an incredible volume, which if you look at insider trading took maybe 30 or 40 years to develop,” Stark said. “I don’t see how the SEC can recover from that without just saying, ‘we’re not doing these cases anymore.’”

Hurry Up and Wait

Judges in several SEC crypto cases are weighing pauses rather than wholesale dismissals.

“They don’t want to have any decisions come out of these disputes that would negatively impact any of the beliefs of the crypto task force,” said JP Brennan, global head of fintech, payments, crypto compliance, and investigations at consulting firm JS Held.

Crypto industry advocates, who have filed amicus briefs voicing support for the digital asset exchanges, would welcome an opportunity to engage with the SEC on compliance matters, according to Brennan.

“They are looking forward to this new guard across different agencies and regulators, but they’re not going to forget what the old one did,” he said. “Had the SEC taken the time to work with these exchanges, I believe that many of these enforcement actions would never have occurred.”

Charting a Course

Next steps for the SEC may include issuing guidance or a report of investigation, a rarely used interpretive tool the agency can deploy under Section 21(a) of the Securities Exchange Act, or even beginning a formal rulemaking process.

Investigations that often precede SEC enforcement actions are another factor weighing on companies seeking to work with digital assets, presenting an obstacle and expense for many that are still contending with holdover probes from the last administration.

“Just the investigation alone is a killer,” Anderson said. “In some cases, the government sends letters to the firm’s clients, and those cruise missile letters and overzealous prosecutions hurt investors.”

Companies and investment advisers dealing with investigations brought during the tenure of former SEC Chair and crypto skeptic Gary Gensler are likely wondering whether pursuing litigation would be worth the time and expense, given the uncertainty about the SEC’s broader stance on crypto moving forward, according to Anderson.

Some SEC watchers are urging the agency to provide more clarity through rulemaking.

Failing to put guardrails on crypto trading and digital asset exchanges could set up regulators for potential disaster, Stark said, citing the blame the SEC took for the subprime mortgage crisis and Enron scandal during his tenure at the agency.

“There’s systemic risk to not having seat belt laws,” he said. “The same goes for securities, and I feel like they are just completely ignoring that systemic risk created by crypto.”

The cases are Crypto Freedom Alliance v. SEC, 5th Cir., No. 25-10208, motion 2/19/25; Coinbase Inc. v. SEC, 2d Cir., No. 25-145, motion 2/14/25; Lejilex v. SEC, N.D. Tex., No. 4:24-cv-00168, motion 2/11/25; SEC v. Binance Holdings Ltd., D.D.C., No. 1:23-cv-01599, motion 2/10/25.