Coinbase’s Chief Legal Officer called the move a victory for consumers and called on other states to follow. Meanwhile, Crypto.com announced that the SEC closed its investigation into the platform without taking action. This is part of the broader regulatory shift under new SEC leadership. In other legal news, a Texas judge recommended allowing Logan Paul’s defamation lawsuit against YouTuber Coffeezilla to proceed. This is due to the fact that the YouTuber’s statements about Paul’s failed CryptoZoo project could be seen as factual claims rather than opinions. South Carolina Ends Staking Lawsuit Against Coinbase South Carolina became the latest US state to dismiss its lawsuit against Coinbase over the crypto exchange's staking services. The lawsuit accused Coinbase of offering unregistered securities through its staking program, and was officially dropped in a joint stipulation between Coinbase and the South Carolina Attorney General’s securities division on March 27. Coinbase’s Chief Legal Officer, Paul Grewal, celebrated the dismissal , and called it a victory not only for the company but also for American consumers. He is now also hopeful that other states will follow suit soon. South Carolina joined Vermont in abandoning legal action against Coinbase. Both states were among 10 that initially filed enforcement actions against Coinbase’s staking services on June 6 of 2023. Interestingly, this was the same day the US Securities and Exchange Commission (SEC) launched a similar lawsuit, which was itself dismissed on Feb. 27, 2025. The remaining states that continue to pursue similar enforcement actions are Alabama, California, Illinois, Kentucky, Maryland, New Jersey, Washington, and Wisconsin. Grewal pointed out that South Carolina residents lost an estimated $2 million in staking rewards as a result of the state’s legal action. He held firm that American crypto holders deserve clear rules and consumer protections, and praised South Carolina for standing up for fairness and encouraging other states to reconsider their restrictions on staking. South Carolina also recently took a pro-crypto step with the introduction of a new bill that could allow the state to invest in Bitcoin. The ” Strategic Digital Assets Reserve Act of South Carolina ” was introduced on March 27 by Representative Jordan Pace, and it proposes allowing the state treasurer to allocate up to 10% of certain state funds to digital assets like Bitcoin. The bill specifically mentions Bitcoin several times, setting a cap of up to 1 million Bitcoin for the reserve. This is similar to the US federal government’s recently established Strategic Bitcoin Reserve. The proposed legislation permits Bitcoin investments across various state-managed funds, including the General Fund and the Budget Stabilization Reserve Fund. Although the bill focuses primarily on Bitcoin, it does not exclude the possibility of including other digital assets. This move was made during a broader trend across the US, with 42 Bitcoin reserve bills introduced at the state level in 19 states, of which 36 remain active. SEC Drops Crypto.com Investigation Crypto.com also received some good news after the SEC officially closed its investigation into the company without taking any action. The development was announced by Crypto.com CEO Kris Marszalek on March 27, who reflected on the regulatory pressure the firm faced. He even claimed that authorities used every available tool to try to stifle the company's growth. The investigation closure happened seven months after the SEC issued a Wells notice to Crypto.com in August of 2024, signaling its intent to bring legal action against the platform. After the Wells notice, Crypto.com filed its own lawsuit against the SEC in October, accusing the agency of regulatory overreach and a misguided approach to crypto regulation. In a statement on March 27, Crypto.com’s chief legal officer Nick Lundgren welcomed the closure of the investigation and criticized the previous SEC leadership for trying to harm the crypto industry. This decision is part of a broader shift in the SEC’s approach to cryptocurrency regulation under the leadership of acting chair Mark Uyeda, who took over in January after the resignation of Gary Gensler. Since then, the SEC rolled back several enforcement actions and lawsuits against major crypto companies, including Coinbase, Consensys, Robinhood, Gemini, Uniswap, OpenSea, and Immutable. The SEC also dismissed its civil case against crypto trading firm Cumberland DRW with prejudice on March 27. Additionally, the SEC introduced a Crypto Task Force that is led by Commissioner Hester Peirce to encourage a more constructive regulatory environment. It also reversed a controversial rule in January that required financial firms holding crypto assets to list them as liabilities on their balance sheets. Meanwhile, Crypto.com has been advancing its business partnerships, and recently collaborated with Trump Media to launch a series of “Made in America”-themed crypto exchange-traded funds (ETFs). The platform will provide infrastructure and custody services for these ETFs, which are expected to include a basket of leading cryptocurrencies like Bitcoin, Ethereum, Solana, XRP, and its native token, Cronos (CRO). Judge Backs Logan Paul Defamation Lawsuit There are some new legal developments in the NFT space as well. A Texas magistrate judge recommended that influencer Logan Paul be allowed to proceed with his defamation lawsuit against YouTuber Stephen Findeisen, who is also known online as “Coffeezilla.” In a report that was filed on March 26, Magistrate Judge Henry Bemporad advised that federal Judge Orlando Garcia deny Findeisen’s request to dismiss the case, and stated that the YouTuber’s statements about Paul’s failed CryptoZoo project were presented more like factual claims than opinions. Logan Paul filed the lawsuit in June of 2024, and accused Findeisen of making defamatory remarks in an X post and two YouTube videos, which Paul claims caused huge reputational damage. The statements in question included Findeisen labeling Paul a “serial scammer” and describing CryptoZoo as a “scam” and a “massive con.” CryptoZoo was introduced as a blockchain game where players could purchase NFT “eggs” that would hatch into animals. These could then be bred to create unique creatures and earn tokens. So far, the game has not launched yet. Findeisen argued that his statements were intended as opinions and pointed to disclaimers in his video descriptions. However, Judge Bemporad found that the disclaimers were not prominently displayed and would not negate the potentially defamatory nature of Findeisen’s claims. He concluded that Paul sufficiently demonstrated at the pleading stage that the statements could be seen as defamatory. Both parties now have 14 days to object to the judge’s recommendation. In addition to the current lawsuit, a group of CryptoZoo investors filed a class-action lawsuit against Paul and others involved in the project. Paul requested the court to dismiss that case and also filed a counter-suit against two business partners, blaming them for CryptoZoo’s collapse.
