Developments in Crypto Litigation and Enforcement Under the New Trump Administration
Introduction
The inauguration of President Trump in January 2025 has ushered in a sharp turn in U.S. crypto enforcement and regulatory policy. Within weeks, federal agencies pivoted from the Biden administration’s aggressive stance to crypto toward a more pro-crypto approach, backing away from high-profile crypto litigation and emphasizing regulatory “clarity” over punitive action.
This post examines key developments in crypto-related federal litigation and enforcement under the new Trump administration. We review major enforcement cases dropped or paused in early 2025, new cases (if any) initiated under the new administration, shifts in policy at agencies like the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), Department of Justice (DOJ), and Treasury Department, and compare this new approach to that of the Biden administration. Finally, we consider anticipated changes in crypto litigation and enforcement moving forward.
Retreat from Biden-Era Crypto Enforcement: Cases Dropped or Put on Hold
One of the most striking early developments has been the swift rollback of several prominent enforcement actions targeting crypto businesses. In the first month of the new administration, regulators moved to dismiss or freeze numerous pending cases that had been pursued aggressively under President Biden.
At least 89 enforcement cases or investigations were halted or dropped in the initial weeks of 2025 – a quarter of the major actions pending at the end of the prior administration. President Trump’s crypto team explicitly framed many of these past actions as examples of government “weaponization” against lawful businesses, vowing to end what they believed to be “regulatory overreach.”
SEC Enforcement Lawsuits Withdrawn: The SEC, in particular, has pulled back from several headline-grabbing crypto lawsuits:
SEC v. Coinbase, Inc. – In a dramatic reversal, the SEC agreed to dismiss its lawsuit against Coinbase, the largest U.S. crypto exchange. The case, filed in June 2023, had accused Coinbase of operating as an unregistered securities exchange and broker by listing crypto tokens the SEC deemed to be securities. On February 27, 2025, the Commission filed a joint stipulation to dismiss the action. SEC Acting Chairman Mark Uyeda explained that, considering the agency’s new Crypto Task Force working to develop clear rules, the SEC decided to “exercise its discretion” to drop the case – emphasizing that the dismissal was to facilitate a new regulatory approach, not a judgment on the merits. This voluntary withdrawal is virtually unprecedented for an SEC case of this magnitude and marked a clear break from the prior administration’s strategy.
SEC v. Kraken – The SEC also quietly abandoned its enforcement action against Kraken, another major exchange. Kraken announced on March 3, 2025, that SEC staff had agreed in principle to dismiss the lawsuit with no penalties. The SEC had sued Kraken in late 2023 for allegedly offering unregistered securities (following on the heels of Kraken’s settlement over its staking program in early 2023). The new deal terminates that case entirely, again reflecting the shift away from regulation-by-litigation.
Binance Litigation Paused: In the SEC’s suit against Binance Holdings and its founder Changpeng Zhao – filed in 2023 for securities-law violations – the parties jointly moved to pause proceedings for 60 days, citing the need to reassess the “shifting regulatory landscape”. In mid-February 2025, a federal judge granted a 60-day stay of the Binance case. This pause, in lieu of pressing ahead in court, suggests the SEC may be open to a settlement (i.e. dismissal) or policy-based resolution once new guidelines are in place. The case is now in limbo pending the outcome of the administration’s broader review of crypto regulation.
Investigation of Robinhood – The SEC has likewise closed its inquiry into Robinhood Markets’ crypto offerings. Robinhood had disclosed an SEC investigation (stemming from its listing of various crypto tokens on its trading app). On February 21, 2025, Robinhood announced the SEC formally terminated its investigation with no enforcement action and no charges. This came the same day as the Coinbase case was dropped, underscoring the SEC’s waving the white flag.
OpenSea and NFTs: Another area of retreat is the SEC’s foray into non-fungible tokens (NFTs). The agency had been investigating NFT marketplace OpenSea, even issuing a Wells notice in mid-2024 suggesting that certain NFT sales might constitute unregistered securities offerings. But on February 22, 2025 – just hours after the Coinbase decision – the SEC closed its investigation into OpenSea without pursuing any charges. OpenSea’s co-founder hailed the outcome, noting that treating NFTs as securities would have been a major step backward for creators. The closure indicates the SEC is stepping back from novel theories that push the envelope of securities law in the digital art realm.
Gemini Earn Case: The SEC’s action against Gemini Trust Co. and Genesis Global Capital, related to the Gemini Earn lending program, has effectively been dropped as well. That case (filed in January 2023) alleged the Earn program was an unregistered securities offering. On February 27, 2025, Gemini’s Cameron Winklevoss announced that the SEC closed its investigation and would not pursue the charges. This came almost a year after Gemini had received a Wells notice. Winklevoss declared it “the end of the SEC’s ‘war on crypto,’” as the company avoided what had been looming enforcement.
Tron/Justin Sun: Even the SEC’s case against Tron founder Justin Sun is on hold. In March 2023, the SEC sued Sun and associated entities for unregistered token sales and market manipulation. Now both sides have moved to stay that litigation – a joint motion filed on Feb. 26, 2025 indicated they are halting the case, possibly to negotiate a settlement. While details are sparse, the stay signals a de-escalation. Sun had recently become an outspoken supporter of a pro-crypto administration, and the SEC’s willingness to pause the case suggests a deal may be in the works.
Notably, even where cases have not (yet) been formally dismissed, the new SEC leadership has sent signals of retreat. For example, references to the SEC v. Ripple Labs lawsuit briefly disappeared from some SEC web pages, fueling speculation about its fate. In SEC v. Ripple Labs, Inc., the landmark case in which Judge Torres ruled that Ripple’s sales of XRP in certain contexts did not violate securities laws, both the SEC and Ripple had filed cross-appeals in late 2024. Under prior Chair Gensler, the SEC was pressing to overturn parts of Judge Torres’s ruling that favored Ripple, and an opening appellate brief was filed on January 15, 2025. Although the appeal is not yet dropped, if the SEC does abandon the appeal, Judge Torres’s July 2023 decision (holding that XRP is not inherently a security and that programmatic exchange sales of XRP were not investment contracts) would stand. Ripple would then be left with the narrow portions of the decision that went against it (institutional sales) and a potential civil penalty, but no further legal battle.
In case after case, the SEC is backing down from fights with crypto firms under the new administration. Coinbase, Kraken, Binance, Robinhood, OpenSea, Gemini, Tron – virtually every major enforcement action from the past two years that didn’t involve crypto fraud is now withdrawn or on hold. An SEC spokesperson even stated (in the context of dismissing the Coinbase suit) that these decisions “do not reflect an assessment of the merits” and shouldn’t be read as the SEC conceding on legal issues. Rather, the SEC is exercising its discretion to recalibrate its approach to crypto regulation. In effect, the Commission is hitting pause on the most controversial crypto cases, opting to pursue policy changes first. This marks a 180-degree reversal from the prior administration’s “enforcement-first” playbook.
A Narrower Focus: New Enforcement Actions Filed (Fraud Emphasis)
While many high-profile cases have been shelved, the new administration has been careful to signal that it is not giving a free pass to fraud or criminal activity in the crypto markets. Enforcement has continued in areas involving clear-cut fraud, Ponzi schemes, hacks, and other crimes with victims, aligning with the administration’s stated priority of targeting bad actors rather than casting a wide net over the industry.
For example, in one of the first crypto-related actions under new leadership, the CFTC announced a fraud case against a former investment banker accused of operating a digital asset Ponzi scheme. On February 10, 2025, the CFTC revealed a consent order against Rashawn Russell, who solicited investors for a crypto fund with false promises and misappropriated about $1.5 million. Russell had already pleaded guilty to wire fraud in a DOJ case, and the CFTC’s civil action underscored that fraud will still be “vigorously” prosecuted. Acting CFTC Chair Caroline Pham noted that this case exemplified the agency’s refocused enforcement priorities – rooting out fraud and manipulation – even as it steers away from regulating by enforcement in more gray areas.
Similarly, the DOJ has continued to pursue criminal cases initiated during the prior administration or stemming from ongoing investigative work. In early February 2025, the DOJ unsealed an indictment against a Canadian national for a $65 million cryptocurrency hacking scheme, a case investigated by the FBI and the DOJ’s National Cryptocurrency Enforcement Team (NCET). This shows that the DOJ’s crypto enforcement infrastructure (like NCET, established in 2021) remains in operation to tackle hacking, money laundering, and other crypto-related crime. High-profile prosecutions from the 2022–2024 period – such as the criminal case against FTX founder Sam Bankman-Fried – are also moving forward to their conclusions, unaffected by the change in administration. In short, fraud is still fraud: the new DOJ has stated it “remains committed to vigorously enforcing federal law and holding criminals accountable” even as it shifts focus away from regulatory overreach.
It is telling, however, that we have not seen new regulatory lawsuits filed against crypto firms in the opening months of 2025. Unlike early 2023 – when the SEC and others rolled out enforcement against a range of crypto players (exchanges, lending platforms, token issuers) – early 2025 has not seen new federal crypto civil suits beyond those targeting alleged scams. The absence of new SEC or CFTC cases for mere securities or commodities law violations sends a strong message that the era of “regulation by enforcement” has been paused.
Regulatory and Policy Changes at the SEC, CFTC, DOJ, and Treasury
In parallel with changing litigation tactics, the Trump administration has moved quickly to reshape crypto policy at the federal agencies. These changes aim to replace the prior administration’s enforcement-driven approach with clearer regulations and pro-innovation policies. Below we outline major developments at the key regulators: the SEC and CFTC (the primary market regulators), the DOJ (criminal enforcement), and the Treasury Department (which includes agencies overseeing financial crimes and banking).
SEC: From Enforcement to “Engagement” and Rulemaking
Under President Biden, the SEC (led by Chair Gary Gensler) took an expansive view of its jurisdiction over crypto, bringing dozens of enforcement actions and asserting that most tokens are securities. By contrast, President Trump campaigned on making the U.S. “crypto capital of the world” with crypto-friendly regulators, and his administration lost no time installing new SEC leadership and rolling back certain policies.
Leadership Overhaul: Gary Gensler resigned as SEC Chair effective January 20, 2025, as Trump had promised to replace him. President Trump nominated Paul Atkins, a former SEC Commissioner known for his deregulatory stance, as the next SEC Chairman. In the interim, Republican Commissioner Mark T. Uyeda is serving as Acting Chair. Commissioner Hester Peirce – often called “Crypto Mom” for her advocacy of crypto innovation – has been appointed to lead a newly reconstituted Crypto Task Force within the SEC. These personnel changes set the tone: all are figures who have criticized the prior SEC approach as stifling innovation.
Crypto Task Force and Policy Shift: On January 21, 2025, Acting Chair Uyeda formally announced the formation of the SEC’s Crypto Asset Task Force. The Task Force, led by Peirce, is charged with developing a “comprehensive and clear regulatory framework” for crypto assets and advising on forward-looking policy. Uyeda acknowledged that for years the SEC’s stance on crypto was primarily expressed through enforcement actions without sufficient public input, and he stated, “it’s time for the Commission to rectify its approach”. The Task Force represents a pivot toward rulemaking and guidance in collaboration with stakeholders, rather than forcing the issue through lawsuits. In a related move, the SEC in late February unveiled a reorganization of its enforcement division: the old “Crypto Assets and Cyber Unit” (a 50-lawyer unit Gensler had expanded) is being pared down and refocused entirely on fraud cases. A new Cyber and Emerging Technologies Unit of about 30 attorneys will handle crypto-fraud and cyber-fraud matters, leaving broader crypto policy questions to the Task Force and the rulemaking process. In practice, this means many SEC attorneys who were pursuing exchange registration cases or token registration cases are being reassigned to other work.
Reversing Previous Guidance: The new SEC leadership also moved to undo or pause certain policies from the prior administration that the industry viewed as roadblocks. Notably, in one of its first acts, the Commission rescinded Staff Accounting Bulletin No. 121 (SAB 121). SAB 121, issued in March 2022, had required companies holding crypto assets for customers (like exchanges or banks offering custody) to record a liability on their balance sheet for the assets, along with a corresponding asset – effectively treating custodial crypto as the company’s own asset/liability. This controversial accounting guidance deterred many banks from entering the crypto custody business. In January 2025, the SEC issued SAB 122, revoking SAB 121. By removing this requirement (which was never mandated by any statute), the SEC eliminated a significant disincentive for traditional financial institutions to engage with crypto. The message is that the Commission wants to encourage responsible participation in the crypto market rather than punish it with stringent accounting rules.
Halted Rulemaking and No-Action Relief: Additionally, the SEC is reassessing several pending rule proposals that would have indirectly squeezed crypto. For example, a proposed expansion of the custody rule for investment advisers (which would have made it harder for advisers to use crypto custodians) is reportedly under review and likely to be softened or re-proposed. There are also discussions about issuing “no-action” letters or exemptions to certain compliant crypto firms to give them regulatory breathing room while new rules are developed. While details are still emerging, the overall regulatory posture of the SEC in early 2025 is one of engagement and reprieve: engaging with the industry to craft clear rules and providing reprieve from enforcement in the meantime.
CFTC: Emphasis on Fraud and Awaiting New Authority
The CFTC, which oversees derivatives and has anti-fraud authority in commodity markets, also underwent a leadership change. Chairman Rostin Behnam (who under Biden had been active in crypto enforcement) stepped down on January 20, 2025. President Trump has nominated Brian Quintenz – a former CFTC Commissioner known for being crypto-friendly – as the next permanent Chair. Until confirmation, Republican Commissioner Caroline D. Pham is serving as Acting Chair.
Under Acting Chair Pham, the CFTC promptly signaled a shift in priorities. On Feb. 4, 2025, Pham announced a restructuring of the CFTC’s Division of Enforcement to concentrate on fraud and manipulation cases, essentially “ending its practice” of broad regulation by enforcement. The Enforcement Division is being split into two special task forces: one focusing on retail fraud (e.g., Ponzi schemes targeting mom-and-pop investors) and another focusing on complex fraud and market manipulation (which could include things like pump-and-dump schemes or manipulative trading in crypto markets). This reorganization mirrors the CFTC’S NEW philosophy that only clear bad actors should face aggressive enforcement, while honest market participants should not be harassed with technical violations.
The CFTC’s first actions under Pham have reinforced this message. The aforementioned case against Rashawn Russell (a clear-cut fraud) was touted as exemplifying the kind of enforcement that will continue. At the same time, the CFTC has not announced any new actions akin to its previous high-profile lawsuits (for instance, the CFTC’s suit against Binance in March 2023 for operating an illegal commodity exchange, or its action against the Ooki DAO). Those types of cases, which tested the boundaries of the CFTC’s jurisdiction over spot crypto trading and novel entities, appear to be on hold. In public remarks, Pham has acknowledged that the CFTC lacks statutory authority to create a comprehensive framework for spot digital asset markets. Under current law, the CFTC can regulate derivatives (futures, swaps) on commodities and police fraud or manipulation in commodity spot markets, but it cannot impose licensing or reporting requirements on spot crypto exchanges. Both Pham and nominee Quintenz have indicated they will work with Congress to seek new laws rather than stretching existing powers. In the meantime, the CFTC is likely to take a back seat on regulating the crypto spot market, deferring to whatever regime might be crafted by legislation or the SEC’s new framework. Any ongoing CFTC litigation from the prior era may be quietly settled or just not actively pursued (for example, we may see the CFTC settle the Binance case rather than push for a precedent in court).
It’s worth noting that the CFTC had a banner year in 2024 largely due to one case – the FTX collapse (yielding billions in restitution/penalties). With that behind, the Commission under new leadership is de-emphasizing headline-grabbing actions and returning to its core mission of preventing fraud and market abuses.
DOJ: Changing Priorities but Continuing to Target Criminal Misconduct
At the Department of Justice, the change in administration has brought new leadership (Attorney General and U.S. Attorneys) and a shift in enforcement priorities. Under President Biden, DOJ had ramped up efforts against crypto-related crime, launching the NCET and pursuing cases ranging from high-profile exchange failures (FTX) to sanctions evasion (Tornado Cash developers) to insider trading and rug pulls. Under President Trump, the DOJ’s focus appears to be realigning with the administration’s broader emphasis on national security and individual wrongdoing, rather than corporate regulatory violations.
Leadership and Philosophy: President Trump’s new Attorney General, Pam Bondi, has yet to announce publicly a crypto-policy, but early indications are that DOJ will prioritize areas like border security, terrorism, and corruption that align with Trump’s agenda, and deprioritize what some in the administration call “weaponization” of regulatory laws against businesses. Indeed, President Trump issued an Executive Order in February 2025 pausing enforcement of the Foreign Corrupt Practices Act (FCPA), arguing that anti-bribery enforcement was interfering with U.S. foreign policy interests. This move to halt enforcement of a major white-collar statute sent shockwaves through the legal community, and it underscores the administration’s willingness to pull back DOJ activity in areas it perceives as overreach.
Applying those early moves to crypto, crypto-related crime that intersects with national security or common fraud remains a target. The DOJ is continuing to pursue cases of crypto being used for money laundering, hacking, drug trafficking, or sanctions evasion. For example, DOJ’s efforts to combat North Korean hackers’ exploitation of crypto, and to shut down illicit crypto mixing services tied to bad actors, are expected to carry on. In one notable case from 2023, DOJ sanctioned and arrested operators of a China-based exchange (Bitzlato) used for money laundering – such actions are likely to be continued under the new administration, as they clearly align with anti-crime and security objectives.
What we have not seen in 2025 is DOJ piling on to the kind of cases the SEC was bringing. Under the prior administration, DOJ pursued parallel actions or assisted in broader crackdowns (for instance, where SEC sued a company for an unregistered ICO, DOJ might investigate it for securities fraud if there were misrepresentations). That kind of synergy may diminish now. If a crypto company is not accused of defrauding anyone and the issue is simply failure to register properly, DOJ prosecutors are unlikely to expend resources on it. We also might expect DOJ to show leniency or decline prosecution in certain borderline cases. .
In summary, expect DOJ to maintain robust enforcement against crypto fraud, hacks, and illicit use, but to pull back from any novel legal theories or marginal cases. The DOJ will prosecute fraud, while likely ignoring technical regulatory violations that do not involve fraud.
Treasury Department: Financial Policy and Compliance Shifts
The Treasury Department, led by Secretary Scott Bessent, plays a critical role in crypto through its oversight of anti-money laundering (AML) rules (via FinCEN), sanctions (via OFAC), and banking regulation (via the OCC and Fed, though the Fed is independent). Under the Biden administration, Treasury had taken a cautious stance: it issued reports warning of illicit finance risks in crypto, pushed for stringent rules on crypto intermediaries, and was exploring a U.S. Central Bank Digital Currency (CBDC). The Trump administration has dramatically changed course in this arena as well.
Executive Order and Working Group: On January 23, 2025, President Trump signed an Executive Order titled “Strengthening American Leadership in Digital Financial Technology.” This Order (and an accompanying White House fact sheet) outline the new administration’s crypto policy. It revokes the prior administration’s Executive Order 14067 on digital assets and the Treasury’s 2022 international crypto framework, explicitly criticizing those as having “suppressed innovation”. In their place, Trump’s Order establishes a high-level President’s Working Group on Digital Asset Markets. This Working Group is chaired by a newly created White House “AI & Crypto Czar” (tech entrepreneur David Sacks has been appointed to this role) and includes the Treasury Secretary, SEC Chair, CFTC Chair, and other agency heads. The mandate is to develop a coordinated federal framework for digital assets, including recommendations for legislation, regulatory jurisdiction boundaries, and the newly-created national digital asset stockpile (an innovative concept of the government holding reserves of Bitcoin or other assets). The Working Group must report back within 180 days with proposed regulatory and legislative actions.
Crucially, the Executive Order directs all agencies to identify existing regulations or actions that affect the crypto sector and recommend which should be rescinded or modified. It also prohibits any agency from promoting or establishing a CBDC, reflecting Trump’s and many conservatives’ opposition to a government-run digital currency. This is a stark reversal from the prior administration, which had encouraged research into a digital dollar. Under Trump, the official policy is pro-private crypto and anti-CBDC.
OCC and Banking Regulation: The Office of the Comptroller of the Currency (OCC), which regulates national banks, has new leadership pending. Trump has nominated Jonathan Gould as Comptroller. Gould is a former OCC chief counsel who is knowledgeable about fintech; his nomination suggests an openness to bank involvement in crypto. This may mean revival of some OCC interpretive letters from late in Trump’s first term that had given banks the green light to custody crypto and use stablecoins for payments (those letters were partially paused under Biden’s OCC). We anticipate the OCC under Gould will issue updated guidance making it easier for banks to partner with crypto firms and to provide services like custody. Similarly, the Federal Reserve, though independent, may face political pressure to be more accommodating to crypto innovation in banking (for example, approving more state trust companies or fintechs for Fed master accounts, an issue that has been contentious).
FinCEN and AML Rules: Under the prior Treasury, FinCEN had considered stringent rules such as requiring exchanges to collect counterparty information for even small crypto withdrawals to private wallets (a rule first proposed in late 2020). That proposal was put on hold by the Biden administration amid industry outcry. It is uncertain whether the new Treasury will revive it or scrap it. Given the rhetoric about ending “unnecessary interference” in digital finance, it’s likely the new team will avoid imposing new AML rules on everyday crypto use. Instead, expect a focus on enforcing existing AML laws against clearly illicit actors. FinCEN may issue new guidance to clarify how the Bank Secrecy Act applies to DeFi or mixers, but any such move will be carefully weighed so as not to dampen legitimate use of crypto. In fact, one early indication: the Treasury’s Financial Crimes Enforcement Network has reportedly been tasked by the White House Working Group to find ways to combat illicit finance without blanket bans or onerous rules.
OFAC Sanctions: A signature Treasury action in 2022 was OFAC’s sanctioning of the Tornado Cash mixer smart contracts, a controversial step treating open-source code as sanctionable property. Dynamis previously wrote about this issue in a piece on the Van Loon decision. Under the new administration, we may see a reassessment of that approach. The administration’s ideology of fewer regulations might translate into fewer such broad actions. It would not be surprising if, behind closed doors, the administration leans on OFAC to focus on sanctioning individuals and entities (like criminal organizations) rather than technologies or software protocols. How this plays out will be telling: if a major DeFi protocol is found laundering funds, will OFAC sanction it as a whole (the way Tornado was), or will they limit actions to the people running it? The crypto industry will be watching closely, as this signals how far the “innovation-friendly” stance goes when balancing against national security.
Overall Treasury Stance: Treasury Secretary Bessent will likely coordinate closely with the White House Crypto Czar and the SEC/CFTC to ensure a united front. The fact sheet for Trump’s Executive Order uses phrases like “eliminating regulatory overreach” and keeping growth “unhindered by restrictive regulations”. This ethos will permeate Treasury’s approach: expect fewer broad pronouncements of crypto’s risks and more talk of supporting U.S. competitiveness in fintech. Even international engagement might shift – whereas the Biden Treasury had worked with the G20 on global crypto standards and cautious approaches, the Trump Treasury may advocate for the U.S. to blaze its own trail to attract crypto business, perhaps even relaxing some standards to outcompete other jurisdictions.
Comparison to the Prior Administration’s Approach
The contrast between the new administration’s approach and that of the prior (Biden) administration could not be more stark. Lawyers and market participants who grew accustomed to the previous status quo are now navigating a rapidly changing landscape.
Enforcement vs. Innovation Rhetoric: Under President Biden and SEC Chair Gensler, the mantra was that the vast majority of crypto tokens are securities and that crypto firms were operating outside the law. The SEC from 2021–2024 brought a flurry of enforcement actions – approximately 83 crypto-related actions under Gensler’s tenure by one count – including actions against major exchanges (Coinbase, Binance), lending platforms (BlockFi, Celsius), token issuers (Ripple, LBRY), and individuals. Gensler often repeated that the law is clear and that crypto entities simply needed to “come in and register,” while simultaneously denying or ignoring industry calls for bespoke rules. The prior administration’s stance was characterized by skepticism of crypto’s value and a focus on investor protection above all. For example, Treasury’s reports in 2022–2023 highlighted scams, volatility, and illicit uses of crypto, providing a basis for strict oversight. Regulatory bodies like the banking agencies warned banks about crypto risks, contributing to what some in the industry dubbed “Operation Choke Point 2.0” – an alleged informal pressure campaign to marginalize crypto businesses from banking services.
In sharp contrast, the Trump administration has explicitly positioned itself as pro-crypto and anti-“overregulation.” President Trump himself, who was once a crypto skeptic (criticizing Bitcoin back in 2019), pivoted during the 2024 campaign to court the crypto community. Backed by prominent crypto advocates, he pledged that crypto regulation would be crafted by “people who love the industry, not hate the industry,” and that the U.S. would be the world’s crypto hub. The new administration’s communications emphasize fostering innovation, economic opportunity, and American leadership in digital assets. Rather than highlight the risks and harms of crypto, they highlight the risks of missing out on crypto advancement if regulations are too strict.
Dropping the Sword: Practically, the Biden administration wielded enforcement as a sword to cut down what it saw as violations. The new administration is sheathing that sword. A vivid illustration is the language used by each administration’s SEC. In the Coinbase case filings: the Biden-era SEC’s complaint accused Coinbase of flouting the law and put the entire business model on trial; the Trump-era SEC’s dismissal filing, by contrast, said the case’s continuation would impede the agency’s efforts to reform its approach. The latter essentially admits that enforcement actions had outpaced regulatory clarity. This admission validates a core criticism many had of the prior approach – that the SEC was making policy by enforcement, which is not how regulated industries typically get rules.
Regulatory Freeze vs. New Initiatives: The Biden administration had several ongoing regulatory initiatives: for instance, the SEC proposals on custody and exchanges (which could affect DeFi), banking regulators’ guidance on stablecoin reserves, and interagency work on a potential CBDC. Many of these are now paused or expected to be abandoned. In their place, the Trump administration is backing legislative efforts like the FIT21 bill – a comprehensive crypto regulatory framework that passed the House in 2024 but stalled in the Senate. With a Republican White House and a receptive Congress, there is optimism that legislation dividing oversight between the SEC and CFTC (and carving out decentralized “digital commodities”) will become law. The prior administration was lukewarm or opposed to such legislation (President Biden signaled he would veto some GOP-led crypto bills); now, the executive branch is likely to actively collaborate with Congress to get it done. This is a fundamental change: instead of agency-by-agency regulation through ambiguous enforcement, the aim is a clear statutory regime that everyone can follow.
Market Reaction: The differing approaches have also prompted different reactions from the crypto industry and the public. Under the prior administration’s crackdowns, crypto firms often took a defensive litigation stance or moved offshore. We saw firms like Coinbase mounting vigorous legal defenses and even suing the SEC (Coinbase filed a mandamus petition to compel the SEC to respond to its rulemaking petition). Tensions were high, and many felt the industry was at war with its regulators. Now, early 2025 has seen a marked thaw: industry leaders are applauding the new direction. When the SEC dropped the Coinbase case, Coinbase’s CEO called it a “bogus” case finally gone, and others in the community echoed relief that the “war on crypto” was ending. Prices of some crypto assets rallied on news of enforcement reversals, reflecting optimism about the U.S. market. Critics, however, including some investor protection advocates, worry that the pendulum may be swinging too far the other way. They argue that dropping enforcement wholesale could embolden bad actors and leave consumers unprotected. These critics see the prior administration’s efforts as necessary to rein in a Wild West, and fear that a hands-off approach will lead to more frauds like FTX. The truth may lie in between – effective regulation likely requires a mix of clarity and accountability.
From a lawyer’s perspective, the shift means that certain strategies (like fighting the SEC in court on novel issues) may give way to engaging with regulators to shape policy. Law firms are now helping clients submit comments to the SEC’s task force, draft legislative proposals, and explore compliant frameworks, whereas a year ago we were more focused on litigation defense and analyzing where enforcement might strike next. It’s a change from a reactive mode to a proactive one.
Anticipated Changes in Crypto Policy and What to Watch For
Going forward, we can expect several important developments in crypto litigation and enforcement as the new policies take root:
Legislative Action in 2025: All eyes are on Congress to fill the regulatory void with legislation. Key proposals include a bipartisan stablecoin regulatory bill (sponsored by Sen. Bill Hagerty and others) to establish a framework for payment stablecoins, and a broader market structure bill (the revised version of FIT21) to clearly divide crypto into securities and commodities with appropriate oversight. With the administration’s backing, there is a strong chance something will pass in 2025. If new laws pass, they will greatly influence litigation – potentially mooting some cases (by legalizing certain activities under a license system) or giving regulators new authority to resume enforcement under clearer rules.
Resolution of Paused Cases: The currently stayed or paused enforcement cases (e.g., Binance, Ripple, Tron) will likely reach some resolution without full trials. We anticipate settlements or outright dismissals in many of these matters. For instance, the SEC and Binance could negotiate a settlement that includes some compliance undertakings or a fine for past issues but allows Binance to continue operating under new guidelines – a far cry from the draconian measures SEC originally sought (like repatriating assets and appointing a receiver). In Ripple, should the SEC drop its appeal, the remaining issues could be settled with Ripple paying a civil penalty for the institutional sales that were deemed violations (Judge Torres had calculated a potential $125 million penalty). Tron/Justin Sun might likewise settle for a fine without admission of wrongdoing. These outcomes will free up both agency and judicial resources and avoid creating appellate precedents that could bind the SEC in the future.
Court Decisions on Industry Challenges: Interestingly, even as agencies pull back, some pending industry-initiated lawsuits against regulators may continue, potentially yielding important court rulings. For example, Blockchain Association v. IRS (filed by an industry group and some states) challenges the Treasury’s interpretation of the tax code’s definition of a “broker” for crypto tax reporting purposes. Similarly, Kentucky et al. v. SEC (brought by state attorneys general and others) contests the SEC’s attempt to regulate in certain crypto areas. These cases were mentioned as “offensive litigation” by the industry to rein in agencies. The new administration might try to resolve those by changing the underlying policies (mooting the cases), but if not, courts could issue decisions that constrain agency authority.
State Enforcement and Private Litigation: One variable to watch is whether state regulators or private plaintiffs step into any perceived void left by federal retreat. During the Biden years, federal and state regulators often worked in tandem (for instance, state securities regulators took actions against BlockFi and Celsius alongside the SEC). If federal enforcement cools, states might become more active individually – e.g., a state attorney general might pursue a consumer protection case against a crypto lender if the CFPB or SEC won’t. There’s also the possibility of increased private litigation: investors who feel wronged may file class actions or suits under securities laws in place of SEC action. Already, we saw private class actions following major crypto collapses (like against Terraform Labs after TerraUSD’s failure). A less aggressive SEC might embolden plaintiffs’ lawyers to argue securities law violations in court themselves, though they lack many advantages the SEC has (and if Congress clarifies the law, some private claims might also be preempted). In any event, crypto companies should not view the federal pullback as blanket immunity – the legal system offers other avenues of accountability.
New Enforcement Focus Areas: The administration’s approach doesn’t mean no enforcement; rather it means a different focus. We anticipate targeted enforcement in areas of clear illegality: Ponzi schemes posing as crypto investments, fraudulent ICOs (if any are still occurring), insider trading cases (e.g., exchange employees abusing information about listings), and any misuse of crypto to facilitate crimes (drug markets, ransomware, sanctions evasion). These cases will continue to emerge. In fact, the SEC’s enforcement director (under Acting Chair Uyeda) has said that the agency’s Cyber and Emerging Tech Unit will continue to “root out those seeking to misuse innovation to harm investors”. That means outright scams, misrepresentations, or theft involving crypto will still trigger SEC or DOJ action. The difference is, cases without fraud (mere regulatory violations) are being tabled for now. Should the industry-wise framework solidify, we could see the SEC and CFTC resume more routine enforcement down the line, but under a clearer rulebook that the industry has had input in.
Global Regulatory Dynamics: While not a U.S. litigation issue per se, it’s worth noting that the U.S. shift could impact global crypto enforcement. If the U.S. becomes markedly more accommodative, other jurisdictions might either follow suit to stay competitive or, conversely, take a stricter stance if they view the U.S. as dropping the ball on investor protection. Already, the EU is implementing its comprehensive MiCA regulation in 2024–2025, and countries like the UK and Singapore are refining their crypto rules. U.S. lawyers dealing with cross-border crypto operations will need to reconcile a perhaps lenient U.S. regime with stricter foreign regimes. Also, cooperation between the U.S. and foreign regulators could be affected – under Biden, information-sharing on crypto enforcement was strong; under Trump, if priorities diverge (e.g., the U.S. cares less about unregistered offerings than the EU might), the coordination could weaken.
In summary, the next phase of crypto regulation in the U.S. looks to be less courtroom drama, more policymaking. We expect fewer judge rulings parsing Howey tests and more agency rulemakings or Congressional hearings hashing out definitions. For lawyers, that means the skill set needed may shift from litigation defense to regulatory advocacy – helping shape the rules of the road. It also means advising clients to take advantage of the breathing room: many crypto firms are now rushing to become compliant or improve their practices in anticipation of clearer laws, rather than bracing for a lawsuit. The climate of fear is lifting, but uncertainty isn’t gone – it’s just moving from the courts to the rulemaking arena.
Conclusion
The early months of the Trump administration have brought a dramatic realignment of U.S. crypto litigation and enforcement. A series of high-profile SEC cases have been dropped, paused, or settled, reflecting a top-down directive to halt “aggressive enforcement actions” that, in the administration’s view, were stifling innovation. In place of enforcement, regulators are pursuing engagement: new task forces, policy working groups, and a push for Congress to enact clear laws. Compared to the prior administration’s hardline approach, the current trajectory is far more industry-friendly, prioritizing regulatory clarity, collaboration, and fostering the growth of digital assets on U.S. soil.
We are effectively in a transitional period. The outcomes of this grand policy recalibration will become clearer in the coming year. If successful, by late 2025 we may have a more coherent legal regime for crypto assets that reduces the need for constant litigation. If the experiment falters (say, if a major unchecked fraud causes public backlash), regulators could swing the pendulum back. For now, however, the message from Washington is one of cooperation and optimism – a belief that with the right regulatory touch, the U.S. can indeed be the “crypto capital” of the world, balancing innovation with protection.
How Dynamis Can Help
At Dynamis LLP, we specialize in navigating the complexities of cryptocurrency law. Whether you’re a business incorporating blockchain technology, an individual facing regulatory scrutiny, or a client involved in a crypto dispute, our experienced team can provide guidance tailored to your unique needs. If you have questions about cryptocurrency-related legal matters, contact us today or email Eric Rosen. We’re here to help you stay informed and protected in this rapidly evolving space.
