Coinbase gains momentum as fourth state drops illegal staking lawsuit
Enforcement-based approach hinders clear regulation
Illinois will become the fourth U.S. state to withdraw its lawsuit against the crypto exchange Coinbase, joining a growing number of states stepping back from legal actions. Six other state-level cases remain pending.
These withdrawals follow the U.S. Securities and Exchange Commission’s (SEC) decision in February to drop its federal lawsuit against Coinbase — a move that signals a broader regulatory shift in crypto oversight under the Trump administration.
All ten state lawsuits were originally filed in June 2023, largely based on the SEC’s complaint, which alleged that Coinbase had violated securities laws through its staking program. This program allowed crypto holders to earn rewards by locking up their digital assets.
The SEC argued that these services amounted to unregistered securities offerings, prompting ten states to follow with their own legal actions.
“The office intends to withdraw the complaint against Coinbase,” a spokesperson for Illinois Secretary of State Alexi Giannoulias told CoinDesk, without specifying a timeline for the case closure.
This makes Illinois the fourth state to back away from legal action within the past month. Vermont (March 13), South Carolina (March 27), and Kentucky (March 31) had already followed the SEC’s lead.
Enforcement-based approach hinders clear regulation
Meanwhile, six states — Alabama, California, Maryland, New Jersey, Washington, and Wisconsin — have made no moves to drop their lawsuits.
Officials in New Jersey and Washington confirmed that their cases remain active. The other four states have made no public statements regarding the status of their litigation.
Coinbase has repeatedly argued in favor of clearer federal regulation, rather than state-by-state enforcement and litigation.
Now, Coinbase’s Chief Legal Officer Paul Grewal has once again urged Congress to end the fragmented, lawsuit-driven approach and instead pass a federal market structure law. “It’s time to stop regulating through lawsuits and bring clarity with federal legislation,” Grewal said.
As we wrote, in a landmark moment for the U.S. cryptocurrency industry, Coinbase CEO Brian Armstrong praised the outcomes of the White House Digital Asset Summit, calling it a “historic day.”
