- The SEC dismissed Dragonchain’s lawsuit, citing new policy and Crypto Task Force efforts.
- Dragonchain maintained DRGN as a utility token, not a security, throughout the case.
- The SEC has been reassessing crypto regulations since President Trump’s executive order.
The US Securities and Exchange Commission (SEC) has filed a motion to dismiss the case against blockchain firm Dragonchain. This decision was filed jointly in the federal court on April 24 with reference to the Crypto Task Force’s recent measures. The task force, which was formed in January, aims to decide what falls under the regulating authority of the SEC, marking a major policy shift.
Dragonchain had regulatory issues with the SEC in relation to its ICO conducted in 2017. At that time, the agency under former Chair Gary Gensler claimed that ICOs were deemed as securities offerings without registration. The SEC stated that Dragonchain sold securities for about $14 million via 5,000 buyers globally. Additional token sales between 2019 and 2022 were $2.5 million, allegedly used for operational expenses.
The company’s founder, Joe Roets, consistently maintained that its DRGN token was a utility token. In its defense, Dragonchain asserted that the tokens served as software microlicensing rather than investment contracts. Roets, who originally built Dragonchain at Disney in 2014, affirmed that their technology was live prior to the initiation of their token sale.
New Leadership and Policy Direction
The recent dismissal fits with a new approach by the SEC under the leadership of its new chairperson, Paul Atkins who was appointed by Trump in January. Since Atkins took over as the SEC chairperson, the agency has scaled down the enforcement actions started by Gensler. Consequently, similar such cases against other leading crypto firms such as Coinbase, Kraken and Ripple were also dismissed.
Mr. Atkins is expected to discuss his approach to regulation during the Crypto Custody Roundtable that is scheduled for today. This will be his first public statement on digital assets since his assumption in the office. Some of the participants include representatives from Kraken, Fireblocks, Fidelity and Wisdom tree who will be involved in discussion on custody solutions.
Impact of Crypto Task Force
The Crypto Task Force is routinely working with the industry participants to provide guidance on the regulatory requirements. A recent meeting held on March 24 with the representatives of Dragonchain helped to contribute to the dismissal of the lawsuit. In this session, Dragonchain emphasized blockchain in identity, automation, and openness distancing the association with financial investment.
Notably, the SEC has recently clarified that memecoins do not fall under its regulated securities products under its regulatory scope. This clarification came after President Trump signed an order in January to promote America’s leadership in digital assets, leading the SEC to review the cases under its litigation.
The Dragonchain dismissal indicates more extensive changes in the regulation adjustment by the SEC. Further action was stopped in probing cases against firms such as OpenSea, Crypto.com, and Immutable. The new approach that the regulatory body is adopting is not to litigate but to collaborate, which shows the friendly attitude of the current leadership to the industry.
Dragonchain’s Roets welcomed the outcome, stating, “We finally have the right to innovate without fear,” reflecting relief within the broader crypto community.
Following the announcement of the lawsuit’s dismissal, Dragonchain’s (DRGN) price has surged over 90%, pushing it above the $0.10 level. Furthermore, its market capitalization and 24-hour trading volume surged to $35 million and $930K, respectively.
