SEC Dismisses Lawsuit Against Binance, Marking Shift in Crypto Regulation
By Jonathan Stempel
May 30, 2025
In a significant development for the cryptocurrency sector, the U.S. Securities and Exchange Commission (SEC) has voluntarily dismissed its civil lawsuit against Binance, the world’s largest cryptocurrency exchange. This move indicates a notable shift in regulatory approaches to cryptocurrencies, coinciding with a broader change in enforcement tactics since Donald Trump returned to the White House.
Dismissal of Lawsuit
On May 29, 2025, a joint stipulation of dismissal was filed in the federal court in Washington, D.C. This document was signed by legal representatives from the SEC, Binance, and Changpeng Zhao, the founder of Binance. The SEC stated that the dismissal was made "in the exercise of its discretion and as a policy matter" without indicating any views on existing or future cryptocurrency litigation.
Importantly, the suit was dismissed with prejudice, meaning that the SEC cannot refile the case against Binance in the future.
Response from Binance
Following the dismissal, a spokesperson for Binance expressed gratitude towards SEC Chairman Paul Atkins and the Trump administration for their recognition that "innovation can’t thrive under regulation by enforcement." Binance’s interpretation of the dismissal is that it represents a "landmark moment" for the crypto industry, which has often voiced concerns regarding regulatory frameworks affecting its growth.
Background of the Case
The SEC’s original lawsuit, which was filed in June 2023, accused Binance and Zhao of practices such as artificially inflating trading volumes, misappropriating customer funds, and misleading investors regarding the exchange’s surveillance controls. Additionally, the SEC alleged that Binance unlawfully facilitated the trading of certain cryptocurrency tokens that the agency believed should have been registered as securities.
This dismissal comes amid a complicated legal backdrop for Binance. In November 2023, the exchange pleaded guilty to charges related to violations of federal anti-money laundering and sanctions laws, resulting in a substantial criminal penalty of $4.32 billion. Zhao himself served a four-month prison sentence following his guilty plea to related anti-money laundering violations.
Broader Implications for the Crypto Industry
The SEC’s dismissal of the Binance case follows a similar action taken earlier this year against Coinbase, the largest U.S. cryptocurrency exchange. In that instance, the SEC dropped an enforcement case accusing Coinbase of facilitating trades involving unregistered tokens, further indicating a shift in how the regulatory body is handling digital asset companies.
The cryptocurrency industry has long been critical of regulatory attempts to classify digital currencies as securities, arguing that this classification would impose stringent registration requirements that could hinder innovation and growth. SEC Chairman Atkins has emphasized the importance of creating a clear regulatory framework to govern cryptocurrencies, which includes establishing rules related to the issuance, trading, and safekeeping of digital assets while preventing illegal activities.
Trump, during his 2024 presidential campaign, promised to advocate for the cryptocurrency industry, vowing to reverse the regulatory measures put in place by the previous administration under Gary Gensler.
As the regulatory landscape continues to evolve, the SEC’s recent actions could have lasting implications for how cryptocurrency companies operate in the United States and their ability to innovate in the fast-paced digital economy.
Conclusion
The dismissal of the lawsuit against Binance symbolizes a potential recalibration in how U.S. regulators approach the burgeoning field of cryptocurrency. As the SEC continues to navigate its role in this dynamic marketplace, stakeholders across the industry are watching closely to see how future enforcement actions will shape the regulatory environment for cryptocurrencies.
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.
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