The U.S. Securities and Exchange Commission made a surprising move on Thursday by voluntarily dropping its civil lawsuit against Binance, the largest cryptocurrency exchange in the world. This decision marks a shift in the regulator’s approach to cryptocurrencies following the reentry of President Donald Trump into the White House.
A joint stipulation of dismissal was signed by lawyers representing the SEC, Binance, and the exchange’s founder Changpeng Zhao, and filed in a federal court in Washington, D.C. The SEC stated that the dismissal of the enforcement case was a policy decision and did not reflect its stance on other cryptocurrency-related litigations. Importantly, the dismissal was made with prejudice, meaning that the SEC cannot refile the case in the future.
In response to the dismissal, a spokesperson for Binance hailed it as a “landmark moment” and expressed gratitude to SEC Chairman Paul Atkins and the Trump administration for recognizing the importance of fostering innovation in the industry without stifling it through stringent regulations.
The SEC had originally sued Binance and Zhao in June 2023, alleging that the exchange had engaged in activities such as inflating trading volumes, misappropriating customer funds, and providing misleading information about its surveillance controls. Additionally, Binance was accused of facilitating the trading of several cryptocurrency tokens that the SEC believed should have been registered as securities.
This case was separate from Binance’s previous guilty plea in November 2023, where the exchange agreed to a $4.32 billion criminal penalty for violating anti-money laundering and sanctions laws due to lapses in its internal controls. Zhao, the founder of Binance, pleaded guilty to anti-money laundering violations and served a four-month prison sentence before being released in September.
The SEC’s decision to dismiss the case against Binance comes amidst a broader debate within the cryptocurrency industry about the application of federal securities laws to digital assets. Many companies argue that tokens should be classified as commodities rather than securities, as the latter would require extensive registration and disclosure requirements.
SEC Chairman Paul Atkins has emphasized the importance of developing a regulatory framework that provides clear guidelines for issuing, trading, and safeguarding crypto assets while deterring illicit activities. The SEC’s recent actions, including the dismissal of the case against Coinbase and the lawsuit against Unicoin for fraudulent fundraising, reflect its evolving approach to regulating the cryptocurrency market.
Former President Trump, who had promised to be a “crypto president” during his 2024 White House campaign, has advocated for a more industry-friendly approach to cryptocurrencies. With the SEC withdrawing or pausing several enforcement actions under his administration, the future of cryptocurrency regulation remains uncertain.
(Reporting by Jonathan Stempel in New York; Additional reporting by Chris Prentice in New York, and Hannah Lang and Jasper Ward in Washington; Editing by Leslie Adler and Daniel Wallis)
