SEC Cryptocurrency Enforcement Shrinks Significantly: A 180-Degree Turn from Hardline to Retreat

Since the beginning of this year, the U.S. Securities and Exchange Commission (SEC) has undergone a profound shift in its attitude toward cryptocurrency regulation. According to an investigation by The New York Times, which analyzed thousands of court records, over 60% of the cryptocurrency-related cases pursued by the SEC since the Trump administration took office have been eased—whether through suspension of proceedings, reduced penalties, or outright dismissals.

This large-scale policy adjustment is extremely rare in SEC history. Data shows that during Trump’s second term, the SEC dismissed 7 cryptocurrency cases, and another 7 cases were suspended or proposed for favorable settlement. In comparison, a significant portion of the involved parties in these cases are known to have connections to Trump.

The “Hot Potato” for Enforcement Agencies

During Biden’s presidency, the SEC’s regulatory stance has been entirely different. On average, more than two cryptocurrency-related cases are filed each month, covering federal courts and internal legal systems. Even during Trump’s first term, the SEC averaged about one cryptocurrency case per month.

But the current situation has changed dramatically. After Trump took office again, the SEC has not filed any new cryptocurrency cases, while litigation in other industries continues normally.

Former SEC Chair Gary Gensler faced immense pressure during the transition of power. According to insiders, when Gensler’s enforcement chief Sanjay Wadhwa urged the team to continue their work, some staff chose to respond passively—some took long vacations without replying to emails, some refused to sign relevant documents, and others simply stopped handling cryptocurrency cases.

Victor Suthammanont, an enforcement advisor who served at the SEC for ten years, said this transition of power was unlike any before. “The internal atmosphere changed instantly,” he said. “During the previous two transitions, staff stayed at their posts, but this time it’s completely different.”

Policy Shift Under the New Leadership

After Gensler’s departure, Trump first appointed Republican Commissioner Mark T. Uyeda, who has long opposed the SEC’s approach to handling cryptocurrency cases, as acting chair. In an interview, Uyeda stated that Gensler’s regulatory measures lack legal support. As early as 2022, Gensler had expressed the opposite view: “Even with new technologies, current laws do not become invalid.”

In early February 2025, Uyeda made a symbolic personnel adjustment—transferring Jorge Tenreiro, who had led cryptocurrency regulation and overseen multiple related cases, from litigation to the information technology department. This was seen within the SEC as a humiliating demotion. After Tenreiro’s departure, the SEC began halting investigations into several cryptocurrency companies that could face litigation. At least 10 companies have publicly announced they are no longer under investigation.

New SEC Chair Paul Atkins claimed these measures were aimed at correcting past regulatory excesses. “I have made it clear that we will completely abandon the model of enforcement replacing regulation,” he said.

The Pattern Behind Case Dismissals

The most direct reflection of this policy shift is the sharp decline in case numbers. The Trump administration inherited 23 cryptocurrency cases, of which 21 originated during Biden’s tenure, and the SEC has eased 14 of these.

Comparative data further highlights the abnormality of this shift: during Biden’s tenure, the SEC never proactively dismissed any of the cryptocurrency cases left over from Trump’s first term. Yet, after Trump began his second term, 33% of the cryptocurrency cases from Biden’s period were dismissed—far higher than the 4% dismissal rate for cases in other industries.

The dismissal of a lawsuit against a major cryptocurrency exchange is particularly noteworthy. Initially, the SEC proposed only to suspend proceedings, but this was rejected. Later, the SEC proposed dismissing the case but retaining the right to restart proceedings later, which was also not accepted. Ultimately, the SEC chose to fully settle—completely dismissing the case without any option to reopen. Notably, staff from Uyeda’s office personally participated in the settlement negotiations, breaking with usual practice.

After the case was dismissed, lawyers for other cryptocurrency companies followed suit, seeking similar outcomes for their clients. By the end of May, the SEC had dismissed another 6 cases.

The Dilemma of Investor Protection and Regulatory Authority

Within the SEC, opinions on these changes are not entirely uniform. Democratic Commissioner Caroline Crenshaw openly stated that the SEC’s approach gives the cryptocurrency industry an unfair advantage: “They can almost do whatever they want without facing any consequences.”

Former senior litigation attorney Christopher Martin, who retired after the SEC dismissed the cases he handled, expressed concern about the trend of relaxed regulation: “This is completely a compromise and retreat, essentially pushing investors into a fire pit.”

However, SEC Republican Commissioner Hester Peirce argues that this is a correction of past mistakes. She emphasizes that these lawsuits should never have been initiated in the first place, as they hinder legitimate innovation in the industry.

Case Perspective: From Enforcement to Settlement

A well-known cryptocurrency company operator was embroiled in litigation due to multiple violations. In May 2024, after the parent company reached a $2 billion settlement with state regulators, the SEC also began negotiations with the company. In April 2025, the SEC suddenly proposed to suspend proceedings to facilitate a negotiated resolution. By September of the same year, the SEC announced that a settlement agreement had been reached, pending a vote by the commission.

Similar cases include the suspension of a lawsuit against a stablecoin platform and the shelving of a fraud case against a lending platform for further negotiation.

Industry and Policy Interaction

An interesting phenomenon is that the timing of some case dismissals is highly correlated with the involved parties’ business activities. For example, weeks before a case was dismissed, the involved party participated in a multi-billion-dollar commercial transaction. Another company’s parent firm invested nearly $100 million in a family media company about two months after a case was dismissed.

While these coincidental timing windows have attracted external attention, The New York Times’ investigation notes that there is currently no direct evidence of causal relationships or undue pressure.

Legal Dilemmas of Regulatory Authority

The core reason why the SEC faces difficulties in cryptocurrency regulation lies in an unresolved legal issue: Does the SEC truly have the authority to file related lawsuits against the cryptocurrency industry? This depends on whether cryptocurrencies are classified as securities.

The SEC believes many cryptocurrencies are inherently securities, requiring registration and detailed disclosures. The industry counters that most cryptocurrencies are not securities but rather specialized financial products, which should be governed by dedicated regulations. The Cryptocurrency Industry Association states, “We are not seeking to escape regulation; we just want clear and explicit rules to operate under.”

This fundamental legal disagreement is precisely what has prompted the new government to adjust enforcement policies.

Deep Impacts and Future Outlook

This series of actions by the SEC signifies a fundamental shift in federal regulatory attitude. The White House has publicly declared that the president will “stop those aggressive enforcement actions and excessive regulations that hinder cryptocurrency innovation.” The Department of Justice has even disbanded the cryptocurrency enforcement division.

For SEC lawyers involved in handling related cases, this dramatic policy reversal is concerning. They believe that this agency, established after the Great Depression to protect investors and maintain market order, may now be fostering industry chaos, harming consumers, and even posing risks to the entire financial system.

From an industry perspective, however, this marks the beginning of a new era. Cryptocurrency companies have expressed their support, believing they can finally operate within a clear legal framework—even though that framework is still being developed.