The US on Thursday voluntarily dismissed its civil lawsuit against Binance, the world’s largest cryptocurrency exchange. The move extends the new, friendly approach to cryptocurrencies of the Securities and Exchange Commission (SEC), a major financial regulator, since Donald Trump re-entered the White House.
A joint stipulation of dismissal signed by lawyers for the SEC, Binance and its founder, Changpeng Zhao, was filed in the Washington DC federal court. Its dismissal is with prejudice, meaning the SEC cannot pursue the case again. The SEC said that dismissing the enforcement case was appropriate “in the exercise of its discretion and as a policy matter”.
In a statement, a Binance spokesperson called the dismissal “a landmark moment. We’re deeply grateful to [SEC] Chairman Paul Atkins and the Trump administration for recognizing that innovation can’t thrive under regulation by enforcement.” An SEC spokesperson declined additional comment.
Trump promised during his 2024 White House run to be a “crypto president”, becoming the first major presidential candidate to accept crypto donations, and pledged to reverse an industry crackdown overseen by Atkins’ predecessor, Gary Gensler. The SEC has since withdrawn or put on hold many cryptocurrency enforcement cases. Trump himself has launched a cryptocurrency and hosted a dinner for the coin’s top holders.
The SEC sued Binance and Zhao in June 2023, accusing the exchange of artificially inflating trading volumes, diverting customer funds and misleading investors about its surveillance controls.
Binance was also accused of unlawfully facilitating the trading of several cryptocurrency tokens that SEC leadership during Joe Biden’s administration believed should have been registered as securities.
The case was separate from Binance’s November 2023 guilty plea and $4.32bn criminal penalty for violating federal anti-money laundering and sanctions laws through lapses in internal controls. Zhao himself pleaded guilty to money laundering violations, stepped down as CEO and was released from prison last September after serving a four-month sentence.
In February, the SEC dismissed a separate enforcement case accusing Coinbase, the largest US cryptocurrency exchange, of arranging trading in at least 13 unregistered tokens.
The crypto industry has long chafed over regulatory efforts to apply federal securities laws to digital assets, with many companies likening tokens to commodities. Classifying tokens as securities would require cryptocurrency companies to register with the SEC and disclose more to investors.
Atkins said on 12 May that developing a regulatory framework which establishes “clear rules of the road” for issuing, trading and safekeeping crypto assets, while discouraging lawbreakers, would be a key priority.
