Illinois will withdraw its lawsuit against Coinbase, marking the fourth state to abandon legal action against the crypto exchange in less than a month. The decision, confirmed Thursday by a spokesperson for Secretary of State Alexi Giannoulias, follows similar moves by Vermont, South Carolina, and Kentucky.
“The office intends to drop the Coinbase lawsuit,” the spokesperson said.
No specific dismissal date has been disclosed. The lawsuits centered on Coinbase’s staking program, which regulators in ten states alleged violated securities laws by offering unregistered investment products. Filed in June 2023, the cases mirrored a broader federal lawsuit brought by the U.S. Securities and Exchange Commission.
That federal case was dropped in February, a move Coinbase CEO Brian Armstrong described as “hugely vindicating.” In a tweet, Armstrong accused the SEC of employing “mafia tactics” during litigation. The SEC’s retreat has triggered a series of state-level withdrawals, suggesting a shift in regulatory priorities under the Trump administration.
Strategic Shift in Illinois
Illinois’ decision to end its lawsuit comes as the state considers a strategic Bitcoin reserve. House Bill 1844, introduced by State Representative John Cabello, would establish a fund managed by the Illinois State Treasurer to hold Bitcoin for at least five years. The proposal would position Illinois among many states exploring cryptocurrency as a treasury asset.
The bill does not mention the Coinbase case directly, but the timing aligns with the legal reversal. Illinois had been one of ten states to echo the SEC’s original claims, asserting that Coinbase’s staking services constituted unregistered securities offerings. With the federal case dismissed, state regulators have begun reevaluating their own positions.
Remaining Legal Challenges
Six states, Alabama, California, Maryland, New Jersey, Washington, and Wisconsin, continue to pursue legal action against Coinbase.
A spokesperson for the New Jersey Bureau of Securities confirmed the case “remains open.” Bill Beatty, securities administrator for Washington’s Department of Financial Institutions, said the state’s case “remains ongoing at this time.” Spokespeople for California, Maryland, and Wisconsin declined to comment.
The Alabama Securities Commission did not respond to requests for comment.
Coinbase has consistently opposed the decentralized legal strategy. Chief Legal Officer Paul Grewal urged Congress to replace “this litigation-driven, state-by-state approach” with a unified federal framework.
Since the SEC’s exit, he has renewed calls for comprehensive federal crypto legislation. As more states reconsider their positions, Illinois’ withdrawal could pressure remaining jurisdictions to follow suit or clarify their stance.
