Less than three years after the SEC and Dragonchain, a crypto firm touting itself as "America's Blockchain," went to court over what constitutes a security offering, the parties have said they want to drop the suit.

A joint filing to dismiss the agency's lawsuit against the latter was filed Thursday at a Seattle federal court. Citing the Crypto Task Force's work on crypto regulation, the SEC said that it believes dismissing its case against Dragonchain was "appropriate" given that it is a matter of policy.

In February, the SEC affirmed that meme coins can no longer be classified as securities.

The SEC originally filed its complaint against Dragonchain in August 2022, claiming that it conducted unregistered securities offerings through its 2017 initial coin offering, or ICO, and a subsequent discounted token "presale." Crypto companies commonly used this method during that era to raise funds quickly.

At the time, the SEC claimed Dragonchain’s sales raised approximately $14 million from about 5,000 global investors, with an additional $2.5 million in token sales between 2019 and 2022.

Throughout the litigation, Dragonchain maintained that its DRGN token was a utility token—a software micro-license intended for use on the platform, rather than for investment—and challenged the SEC's application of the Howey test to crypto assets. The company argued it had a functioning business, even before its ICO.

Dragonchain's case had been stayed since late 2023, following a settlement offer from Dragonchain. This stay was extended after a January 2024 executive order from President Donald Trump prompting the SEC to pause several crypto-related cases.

The dismissal comes as part of a broader realignment of the SEC's approach to crypto regulation after President Trump's vocal support for the industry. The agency has since dropped a slew of cases against crypto firms, most of which were launched during its Gensler-led era.

In January, the agency established the Crypto Task Force, which is charged with reassessing which digital assets fall under SEC jurisdiction, with the intent of clarifying regulatory boundaries.

Markets responded immediately to the news of the dismissal, with Dragonchain's DRGN token price surging 104% within 24 hours of the announcement, according to CoinGecko data.

Trading volume surged an astounding 11,600% to $1.4 million over the same period, reflecting renewed investor interest in the project after years of regulatory uncertainty. Despite the recent rally, DRGN still trades 98% below its all-time high of $5.46, with a current market cap of $28.74 million.

Edited by Stacy Elliott.