In a significant shift in the legal landscape for cryptocurrency regulation, Illinois plans to drop its staking lawsuit against Coinbase. This development aligns the state with three others in the U.S. that have recently decided to withdraw litigation against the prominent cryptocurrency exchange.
A spokesperson for Illinois Secretary of State Alexi Giannoulias confirmed to CoinDesk on Thursday that the office “intends to drop the Coinbase lawsuit.” However, when pressed for a timeline regarding when the case may officially be dropped, the spokesperson did not provide additional details.
Illinois was initially among ten U.S. states that took action against Coinbase in 2023, accusing the exchange of violating state securities laws through its staking program. This legal action was paralleled at the federal level, where the U.S. Securities and Exchange Commission (SEC) also charged Coinbase for similar violations. Notably, the SEC dropped its own case against Coinbase in February, a decision that may have prompted a domino effect among state regulators.
Following the SEC’s retreat, regulators in Kentucky, Vermont, and South Carolina have also abandoned their respective cases against the crypto exchange. Currently, Coinbase faces ongoing litigation related to its staking services from several states, including Alabama, California, Maryland, New Jersey, Washington, and Wisconsin.
Spokespeople from California, Maryland, and Wisconsin have opted not to comment on the pending suits, adding an air of uncertainty surrounding the future of these cases. On the other hand, a representative for the New Jersey Bureau of Securities stated that the “Coinbase matter remains open,” indicating that litigation efforts are still active. Moreover, Bill Beatty, securities administrator for the Washington Department of Financial Institutions, confirmed that the state’s case against Coinbase is still ongoing as well.
While Illinois’ decision to drop the lawsuit may suggest a re-evaluation of the viability of these allegations, the continued litigation from other states indicates that the regulatory landscape for cryptocurrency exchanges remains fraught with challenges. As the situation evolves, stakeholders in the crypto community will be watching closely for further developments that could affect the operating environment for platforms like Coinbase.
