The US Securities and Exchange Commission is looking to drop its unregistered securities lawsuit against blockchain firm Dragonchain in the agency’s latest crypto-related backdown. 

In a joint stipulation filed with Dragonchain on April 24 in a Seattle federal court, the SEC said it “believes the dismissal of this case is appropriate,” citing the work of the agency’s Crypto Task Force in helping “develop the regulatory framework for crypto assets.”

“The Commission and the Defendants stipulate that this Litigation be dismissed with prejudice […] and without costs or fees to either party,” the filing reads.

The SEC sued Dragonchain, Inc.; its backer, the Dragonchain Foundation; The Dragon Company; and Dragonchain’s founder, Joseph Roets, in August 2024, claiming they raised $16.5 million through a crypto token that was an unregistered securities offering.

According to the SEC, the Dragonchain (DRGN) tokens raised $14 million in an August 2017 presale and an initial coin offering (ICO) that ran in October and November of that year. At the time, it said the company needed to register as the tokens were investment contracts under securities laws. 

The SEC said a further $2.5 million worth of DRGN was sold between 2019 and 2022, which it alleged was used to cover business expenses and develop the firm’s tech. 

The suit was stayed in October after Dragonchain made a settlement offer to the SEC, which was extended in January after the agency said the case should remain paused due to US President Donald Trump’s sweeping executive order earlier that month calling for the country’s “leadership in digital assets.”

Meanwhile, the DRGN token has jumped 95% over the past day to over 8.5 cents on news of the SEC’s planned dismissal, but it’s still down around 98.5% from its $5.46 peak in January 2018, according to CoinGecko.

Dragonchain’s token jumped after the SEC filed to dismiss its lawsuit. Source: CoinGecko

SEC backs off crypto under Trump

It’s the latest case involving crypto that the SEC has abandoned under the Trump administration.

The SEC spun up a Crypto Task Force in January, the day after Trump re-entered the White House, to lead the regulator’s engagement with the crypto industry.

Related: SEC task force met with Trump-supporting firms to discuss crypto regulation 

An agency memo shows its task force met with Dragonchain representatives on March 24 to discuss how the SEC should approach handling crypto.

The SEC has also dismissed some of its most high-profile lawsuits against crypto firms, including its actions against Coinbase, Ripple and Kraken.

It’s also dropped investigations into other crypto firms, including OpenSea, Crypto.com and Immutable, with no further action planned.

Magazine: SEC’s U-turn on crypto leaves key questions unanswered 

Key Takeaways

Bitcoin Standard author Saifedean Ammous says that even if one entity owned a huge amount of Bitcoin, it wouldn’t hurt the protocol

Ammous reiterated major companies like BlackRock and Strategy don’t own the Bitcoin they hold since it belongs to the investors

Ammous said if these companies ever abused their position, people would likely pull their money and invest somewhere else.

Michael Saylor’s Strategy hypothetically hoarding nearly 48% of Bitcoin’s total supply wouldn’t pose any risk to the Bitcoin protocol or its price, says Bitcoin Standard author Saifedean Ammous.

“If Michael Saylor ends up with 10 million Bitcoin, what is he going to do? He’s likely just going to leverage them to buy more Bitcoin,” Ammous said during an April 25 interview with crypto entrepreneur Anthony Pompliano.

Ammous dismisses Bitcoin hoarders posing risks

“Ultimately, I don’t see how it would threaten the protocol in the serious sense,” Ammous said.

Ammous said if Saylor managed to accumulate 10 million Bitcoin (BTC), he would be unlikely to “wake up one day and say let’s try and hard fork this so we can make another 5 million Bitcoin supply so that I can have 15.” He reiterated it would diminish the value of his existing 10 million Bitcoin.

Bitcoin is trading at $93,250 at the time of publication. Source: CoinMarketCap

Several crypto market participants have previously raised concerns about Bitcoin whales and at what point their holdings could lead to risks like market manipulation, centralization, or liquidity issues.

At the time of publication, Saylor’s firm Strategy holds 538,200 Bitcoin, worth approximately $50.18 billion, according to Saylor Tracker. Meanwhile, the BlackRock iShares spot Bitcoin ETF has net assets worth $54.48 billion, which equates to roughly 585,000 Bitcoin, according to BlackRock data.

Strategy paid an average of $67,793 per Bitcoin. Source: Saylor Tracker

Collectively, the two firms hold approximately 5.3% of the total Bitcoin supply. However, Ammous said this is not a cause for concern.

“It’s not like Michael Saylor or Larry Fink owns all those Bitcoins. They have shareholders who own all those Bitcoins, or ETF holders that own those Bitcoins.”

“To the extent that BlackRock and Strategy hold those, they hold those because they are doing their fiduciary share of duties to their shareholders and the ETF holders in a satisfactory way,” Ammous added.

Related: ARK Invest ups its 2030 Bitcoin bull case prediction to $2.4M

Ammous explained that if BlackRock or Strategy ever started to manage their holdings in a way that’s harmful to shareholders or ETF holders, or starts abusing their position, that’s when investors would sell and look for other ways to gain exposure to Bitcoin.

On April 24, Cointelegraph reported that Twenty One Capital, a new Bitcoin treasury company led by Strike founder Jack Mallers with the support of Tether, SoftBank and Cantor Fitzgerald, is looking to supplant Strategy to become the “superior vehicle for investors seeking capital-efficient Bitcoin exposure.”

Magazine: Crypto AI tokens surge 34%, why ChatGPT is such a kiss-ass: AI Eye

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

A subgroup of the North Korea-linked hacker organization Lazarus set up three shell companies, two in the US, to deliver malware to unsuspecting users.

The three sham crypto consulting firms — BlockNovas, Angeloper Agency and SoftGlide — are being used by the North Korean hacker group Contagious Interview to distribute malware through fake job interviews, Silent Push Threat Analysts said in an April 24 report.

Silent Push senior threat analyst Zach Edwards said in an April 24 statement to X that two shell companies are registered as legitimate businesses in the United States.

“These websites and a huge network of accounts on hiring / recruiting websites are being used to trick people into applying for jobs,” he said.

“During the job application process an error message is displayed as someone tries to record an introduction video. The solution is an easy click fix copy and paste trick, which leads to malware if the unsuspecting developer completes the process.”

During the sham job interview, an error message is displayed, requiring the user to click, copy, and paste to fix it, which leads to the malware infection. Source: Zach Edwards

Three strains of malware — BeaverTail, InvisibleFerret and Otter Cookie — are being used according to Silent Push.

BeaverTail is malware primarily designed for information theft and to load further stages of malware. OtterCookie and InvisibleFerret mainly target sensitive information, including crypto wallet keys and clipboard data.

Silent Push analysts said in the report that hackers use GitHub, job listing’s and freelancer websites to look for victims.

AI used to create fake employees 

The ruse also involves the hackers using AI-generated images to create profiles of employees for the three front crypto companies and stealing images of real people.

“There are numerous fake employees and stolen images from real people being used across this network. We’ve documented some of the obvious fakes and stolen images, but it’s very important to appreciate that the impersonation efforts from this campaign are different,” Edwards said.

“In one of the examples, the threat actors took a real photo from a real person, and then appeared to have run it through an AI image modifier tool to create a subtly different version of that same image.”

Related: Fake Zoom malware steals crypto while it’s ‘stuck’ loading, user warns

This malware campaign has been ongoing since 2024. Edwards says there are known public victims.

Silent Push identified two developers targeted by the campaign; one of them reportedly had their MetaMask wallet compromised.

The FBI has since shut down at least one of the companies.

“The Federal Bureau of Investigation (FBI) acquired the Blocknovas domain, but Softglide is still live, along with some of their other infrastructure,” Edwards said.

At least three crypto founders have reported in March that they foiled an attempt from alleged North Korean hackers to steal sensitive data through fake Zoom calls.

Groups such as the Lazarus Group are the prime suspects in some of the biggest cyber thefts in Web3, including the Bybit $1.4 billion hack and the $600 million Ronin network hack.

Magazine: Lazarus Group’s favorite exploit revealed — Crypto hacks analysis