The SEC dismissed its 2021 case against Dragonchain on 09 July 2024 following compliance improvements, as bipartisan support grows for crypto-friendly policies including Trump’s regulatory overhaul pledge.
The U.S. Securities and Exchange Commission abruptly terminated its three-year legal battle against blockchain developer Dragonchain on Tuesday, hours after House lawmakers advanced landmark legislation creating new digital asset oversight frameworks.
Regulatory Reversal Follows Technical Compliance
In a surprise filing with the Washington D.C. District Court, SEC attorneys stated Dragonchain had ‘demonstrated material improvements to compliance infrastructure’ through its participation in the regulator’s Crypto Task Force technical assistance program. The case dismissal on 09 July 2024 came precisely 1,087 days after the initial allegations of unregistered security offerings.
The SEC’s Crypto Task Force confirmed to Reuters that 14 blockchain firms have now completed its compliance program since May 2024, with Dragonchain being the first to achieve case dismissal. ‘This reflects our commitment to working with good-faith innovators,’ said Task Force lead Carolyn Maloney in a press briefing.
Political Momentum Reshapes Enforcement
The regulatory shift coincides with intensified election-year policymaking. Former President Trump doubled down on his 05 July campaign promise to ‘end the war on crypto’ during a Nevada rally, specifically criticizing SEC Chair Gary Gensler’s enforcement record. House Republicans and 73 Democrats then passed the Digital Asset Market Structure Bill (H.R. 7245) on 10 July 2024, requiring clearer token classification standards within six months.
Dragonchain’s DRGN token surged 40% to $0.18 following the news, though remains 92% below its 2018 peak according to CoinGecko data. ‘This isn’t just about one company – it’s a blueprint for how regulators can engage with Web3,’ said Meltem Demirors of CoinShares.
Historical Context: From ICO Crackdown to Collaborative Frameworks
The SEC’s dismissal marks a stark departure from its 2017-2020 enforcement strategy, when the agency pursued over 90 initial coin offering cases. That period saw $1.3 billion in penalties, including the landmark Telegram case that forced return of $1.2 billion to investors.
Current developments echo 2020’s ‘Fintech Sandbox’ experiment between the CFTC and crypto derivatives platforms, which reduced enforcement actions by 38% among participants. However, critics warn the new approach risks creating a two-tier system favoring well-resourced firms. ‘Startups without Dragonchain’s legal budget still face existential threats,’ cautioned Cornell Legal Institute’s Angela Walch.
