US Securities and Exchange Commission pulls suit against Binance, signaling new era under Trump

The US Securities and Exchange Commission (SEC) voluntarily dropped its civil lawsuit against Binance, the world’s largest cryptocurrency exchange, signaling a shift in the agency’s approach to crypto regulation since President Donald Trump returned to the White House.

A joint dismissal agreement, signed by attorneys representing the SEC, Binance, and its founder Changpeng Zhao, was submitted to a federal court in Washington, D.C., Caliber.Az reports via foreign media.

The SEC stated that dismissing the case was “appropriate in the exercise of its discretion and as a policy matter” and emphasised that this decision does not indicate its stance on other ongoing cryptocurrency litigation. 

The dismissal is with prejudice, meaning the SEC cannot reopen the case. A Binance spokesperson described the dismissal as “a landmark moment,” expressing gratitude to SEC Chairman Paul Atkins and the Trump administration for acknowledging that “innovation can’t thrive under regulation by enforcement.” An SEC spokesperson declined to comment further. 

The SEC initially filed the lawsuit against Binance and Zhao in June 2023, accusing the exchange of inflating trading volumes, misusing customer funds, and misleading investors about its surveillance systems. Binance was also alleged to have unlawfully enabled trading of certain cryptocurrency tokens that, under the Biden administration’s SEC leadership, were considered unregistered securities. This case is distinct from Binance’s November 2023 guilty plea and $4.32 billion criminal penalty related to violations of federal anti-money laundering and sanctions laws due to internal control failures. Zhao pleaded guilty and served a four-month sentence, being released in September. 

Earlier, in February, the SEC also dismissed a separate enforcement action against Coinbase, the largest US crypto exchange, which had been accused of facilitating trading in at least 13 unregistered tokens. The cryptocurrency sector has long opposed federal securities regulations being applied to digital assets, with many companies arguing that tokens should be treated as commodities instead. Classifying tokens as securities would require firms to register with the SEC and increase investor disclosures. On May 12, Atkins highlighted the importance of creating a regulatory framework that sets “clear rules of the road” for crypto issuance, trading, and custody, while deterring illegal activities. 

However, on May 20, the SEC filed a fraud lawsuit against Unicoin, alleging the startup and its executives raised over $100 million through false claims that their tokens were backed by real estate and equity in private companies. During his 2024 presidential campaign, Trump pledged to be a “crypto president” and promised to reverse the crackdown led by his predecessor Gary Gensler. Since then, the SEC has dropped or paused numerous cryptocurrency enforcement actions.

By Naila Huseynova