SEC Abruptly Ends Lawsuit Against Binance, Marking Major Retreat in Crypto Crackdown

SEC Abruptly Ends Lawsuit Against Binance, Marking Major Retreat in Crypto Crackdown

Dismissal Ends Nearly Two-Year Legal Saga with Binance and Changpeng Zhao

The U.S. Securities and Exchange Commission (SEC) has officially dropped its high-profile lawsuit against Binance, marking a significant reversal in the agency’s aggressive stance toward the crypto industry.

In a joint motion filed on May 29, the SEC, Binance, and the company’s co-founder Changpeng “CZ” Zhao requested that a federal court in Washington, D.C., formally dismiss the lawsuit with prejudice—ensuring the case cannot be refiled in the future.

SEC Reverses Course as Crypto Task Force Steps In

The filing notes that the SEC’s Crypto Task Force could help resolve the matter, and that the agency had decided to drop the case “in the exercise of its discretion and as a policy matter.” This development follows two earlier pauses in the legal process, one in February and another in April, foreshadowing a potential shift in enforcement direction.

The SEC’s original June 2023 lawsuit accused Binance, its U.S. arm BAM Trading, and Zhao of violating securities laws, misusing customer funds, and misleading users about operations. The abrupt dismissal adds to a growing list of crypto enforcement retreats under the new leadership at the agency.

A Broader Retreat from Crypto Enforcement

This is not the SEC’s only recent climbdown. The agency has also dropped or settled cases against:

• Coinbase

• Kraken

• Consensys

• And ended investigations into Circle, Immutable, and OpenSea

The growing list suggests a pivot in regulatory approach since the Trump administration reinstalled Paul Atkins—a former crypto lobbyist—as SEC Chair. Atkins has announced plans to work with the crypto industry through policy roundtables and is expected to introduce a new regulatory framework for digital assets.

Binance and Zhao Still Face DOJ Penalties

Despite the SEC lawsuit ending, Binance’s legal woes aren’t over. In November 2023, Binance and Zhao settled with the U.S. Department of Justice, agreeing to pay a $4.3 billion fine for violations including:

• Operating as an unlicensed money transmitter

• Breaking sanctions laws

• Failing to implement Anti-Money Laundering (AML) protocols

Zhao also stepped down as CEO, admitted to a money laundering charge, and was sentenced to four months in prison in April 2024.

Binance reacted to the SEC’s dismissal by calling it a “huge win for crypto” and thanked Donald Trump and SEC Chair Paul Atkins for “pushing back against regulation by enforcement.”

Industry Applauds, Questions Remain

This move leaves key questions unresolved about the SEC’s long-term direction, but it is already being celebrated as a milestone win for the digital asset space.

As the SEC shifts toward collaboration and away from litigation, many in the crypto industry are hoping for clear rules, not courtroom battles, to define the next chapter of U.S. digital asset policy.