SEC bids to drop securities suit against Dragonchain over crypto ICO

The US Securities and Exchange Commission is looking to drop its unregistered securities lawsuit against blockchain firm Dragonchain in the agency’s latest crypto-related backdown. 

In a joint stipulation filed with Dragonchain on April 24 in a Seattle federal court, the SEC said it “believes the dismissal of this case is appropriate,” citing the work of the agency’s Crypto Task Force in helping “develop the regulatory framework for crypto assets.”

“The Commission and the Defendants stipulate that this Litigation be dismissed with prejudice [...] and without costs or fees to either party,” the filing reads.

The SEC sued Dragonchain, Inc.; its backer, the Dragonchain Foundation; The Dragon Company; and Dragonchain’s founder, Joseph Roets, in August 2024, claiming they raised $16.5 million through a crypto token that was an unregistered securities offering.

According to the SEC, the Dragonchain (DRGN) tokens raised $14 million in an August 2017 presale and an initial coin offering (ICO) that ran in October and November of that year. At the time, it said the company needed to register as the tokens were investment contracts under securities laws. 

The SEC said a further $2.5 million worth of DRGN was sold between 2019 and 2022, which it alleged was used to cover business expenses and develop the firm’s tech. 

The suit was stayed in October after Dragonchain made a settlement offer to the SEC, which was extended in January after the agency said the case should remain paused due to US President Donald Trump’s sweeping executive order earlier that month calling for the country’s “leadership in digital assets.”

Meanwhile, the DRGN token has jumped 95% over the past day to over 8.5 cents on news of the SEC’s planned dismissal, but it’s still down around 98.5% from its $5.46 peak in January 2018, according to CoinGecko.

It’s the latest case involving crypto that the SEC has abandoned under the Trump administration.

The SEC spun up a Crypto Task Force in January, the day after Trump re-entered the White House, to lead the regulator’s engagement with the crypto industry.

Related: SEC task force met with Trump-supporting firms to discuss crypto regulation 

An agency memo shows its task force met with Dragonchain representatives on March 24 to discuss how the SEC should approach handling crypto.

The SEC has also dismissed some of its most high-profile lawsuits against crypto firms, including its actions against Coinbase, Ripple and Kraken.

It’s also dropped investigations into other crypto firms, including OpenSea, Crypto.com and Immutable, with no further action planned.

Magazine: SEC’s U-turn on crypto leaves key questions unanswered