April 25, 2025

Martin Davis PLLC and Dragonchain are pleased to announce that the United States Securities and Exchange Commission has agreed to dismiss, with prejudice, its lawsuit against Dragonchain, Inc., The Dragon Company, the Dragonchain Foundation, and Joe Roets (collectively, “Dragonchain”). The SEC filed a civil lawsuit against Dragonchain in the U.S. District Court for the Western District of Washington in 2022, alleging that Dragonchain’s utility token DRGN should be classified as an investment contract under the ’33 Act and, therefore, satisfied the criteria of the Howey test with respect to DRGN being a security. Martin Davis successfully defended its position that DRGN was in fact a tokenized micro-license, as proven by several U.S. patents related to its utility and interoperability on the Dragonchain platform, making it a utility token, not an investment contract, and thus, not a security.

“The SEC’s decision to dismiss this matter and release all relevant parties represents significant progress in the ongoing effort to distinguish between the characteristics of crypto assets and how they apply to the foundational principles of securities law,” says David Otto, Managing Partner of Martin Davis. “It underscores that the SEC recognizes not all digital assets are securities, therefore their issuance is not in violation of the ’33 Act or otherwise impacted by the Howey test.”

Martin Davis was retained at the time the lawsuit was filed against Dragonchain in 2022, five years after Dragonchain’s ICO. The litigation strategy was crafted around DRGN’s patents, which both proved its existence as a utility token and rendered it unable to satisfy the criteria of a security as defined under the Howey test. Dragonchain was cooperative and fully complied with the SEC’s requests during the yearslong investigation and is pleased that the SEC confirms their defense.

“Dismissal is a major win for the blockchain community writ large by helping to ensure the United States remains a leader in the global crypto landscape. Regulation by enforcement, however, is not the way forward. Crypto issuers in United States deserve a consistent set of regulations to prevent other companies from experiencing the damages and slowed growth of business that Dragonchain has,” said Benjamin York, Senior Associate Attorney at Martin Davis.

This civil case was formally terminated by the United States District Court for the Western District of Washington on April 25, 2025.

Martin Davis, PLLC
David M. Otto, Managing Partner
Benjamin F. York, Sr. Associate Attorney
Attorneys for Dragonchain et al.