- The U.S. Securities and Exchange Commission (SEC) has dismissed its lawsuit against Dragonchain, citing progress by its Crypto Task Force
- The case, which began in 2022, accused Dragonchain of raising $16.5 million through an unregistered securities offering
- Following the dismissal, Dragonchain’s DRGN token surged by over 95%
The U.S. Securities and Exchange Commission (SEC) has officially dropped its lawsuit against blockchain platform Dragonchain. The case, initiated in 2022, alleged that Dragonchain conducted an unregistered securities offering during its 2017 initial coin offering (ICO). The dismissal, influenced by the SEC’s newly formed Crypto Task Force, led to an almost doubling of Dragonchain’s DRGN token.
From Disney to Potential Damages
Dragonchain, originally developed at Disney in 2014 and later spun out, raised approximately $16.5 million through its DRGN token sale in 2017. The SEC filed a lawsuit in 2022, claiming that the ICO constituted an unregistered securities offering, violating federal laws, with the case also highlighting additional DRGN sales between 2019 and 2022, which the SEC alleged were used to fund business operations and technology development.
However, before the SEC’s case could make much headway under Gary Gensler’s tutelage, the new look agency has decided to drop the case, aligning with a broader shift in its approach to cryptocurrency regulation. Under the guidance of its newly established Crypto Task Force, the SEC is reevaluating its enforcement strategies; the task force aims to develop a regulatory framework that balances investor protection with the innovative potential of blockchain technology.
The DRGN Roars
The dismissal of the lawsuit had an immediate impact on the market, with Dragonchain’s DRGN token experiencing a surge of over 95%. However, the project itself has never reached the levels of adoption that were hoped in 2017, and so it is almost certain to return close to prior levels.
The SEC’s move to drop the Dragonchain case is another example of the shift towards more collaborative and nuanced regulatory engagement with blockchain and cryptocurrency projects.
