SEC Drops Dragonchain Case but Delays Crypto ETF Decisions

SEC and representatives of Dragonchain founder John Joseph Roets, along with affiliated companies, have filed a joint agreement in court to dismiss the case initiated in 2022. This was reported by The Block.

Three years ago, the regulator accused Roets, Dragonchain, Dragonchain Foundation, and Dragon Company of an unregistered securities offering in 2017, raising $16.5 million during an ICO and subsequent token sales.

The Commission sought court orders to halt activities, compensate investors with interest, and impose civil penalties on the defendants.

The current motion is driven by the launch of the SEC’s dedicated “crypto group,” which prioritizes reviewing open cases against crypto companies initiated under former chairman Gary Gensler. In April, Paul Atkins officially took over as chairman of the Commission.

In February, head of the dedicated “crypto group,” Hester Peirce, expressed readiness to offer “temporary prospective and retrospective relief” for token issuance, provided the issuer discloses appropriate current information. 

The agreement between the agency and Dragonchain is part of a broader wave of the regulator retracting its enforcement actions against major cryptocurrency players, including Coinbase, Robinhood, Ripple, ConsenSys, Uniswap, Gemini, and others.

In April, Unicoin co-founder and CEO Alex Konanykhin reported the rejection of an SEC attempt to negotiate terms for ending its investigation against the company. He described the agency’s proposal as an “ultimatum.”

ETF

On April 25, the Commission extended the deadline to June 11 for reviewing applications to launch ETFs based on Polkadot by Grayscale and Hedera by Canary. The documents were submitted in February.

The agency justified the decision by the need for “additional study of rule changes and issues raised in the proposal.”

As reported, CME announced the launch of XRP token futures from Ripple on May 19. In March, the world’s largest derivatives exchange launched Solana-based futures.

According to Bloomberg analyst Eric Balchunas, there are 72 applications for launching ETFs based on various altcoins under review by the SEC.

In February, Balchunas and his colleague James Seyffart estimated the likelihood of a Litecoin ETF being approved at 90%, and products based on Dogecoin at 75%. They considered the chances for Solana (70%) and XRP (65%) to be lower.