SEC Drops Binance Lawsuit in Shift Under Trump Administration

The U.S. Securities and Exchange Commission has formally dropped its civil lawsuit against Binance, the world’s largest cryptocurrency exchange, in a move that highlights the agency’s evolving stance on crypto regulation under President Donald Trump’s return to office. The voluntary dismissal was filed on Thursday in Washington, D.C. federal court, with a joint stipulation signed by attorneys for the SEC, Binance, and Binance founder Changpeng Zhao.

In the court filing, the SEC stated that the dismissal was “in the exercise of its discretion and as a policy matter,” and clarified that the decision “does not reflect its view on other cryptocurrency litigation.” The agency’s decision to drop the case comes “with prejudice,” meaning it cannot reopen the lawsuit in the future.

Binance responded to the decision by hailing it as a pivotal development. A spokesperson for the exchange called the move “a landmark moment,” and added, “We’re deeply grateful to (SEC) Chairman Paul Atkins and the Trump administration for recognizing that innovation can’t thrive under regulation by enforcement.”

While the SEC declined to offer any further comment beyond its filing, the move signals a broader regulatory shift. The lawsuit against Binance, first filed in June 2023, accused the platform of inflating trading volumes, diverting customer funds, and misleading investors about its compliance and surveillance mechanisms. It also alleged that Binance had facilitated trading in several cryptocurrency tokens that the SEC, under previous leadership, had sought to classify as unregistered securities.

The civil case was distinct from Binance’s November 2023 guilty plea in a separate federal matter. In that case, Binance admitted to violating anti-money laundering and sanctions laws and agreed to pay a $4.32 billion penalty. Zhao, the company’s founder, also pleaded guilty to anti-money laundering violations and served a four-month prison sentence, after which he was released in September.

The Binance dismissal follows a similar decision by the SEC earlier this year when it dropped its enforcement action against Coinbase, the largest crypto exchange in the United States. That case had accused Coinbase of facilitating trading in at least 13 unregistered tokens.

For years, crypto industry leaders have expressed frustration with the SEC’s attempts to apply traditional securities laws to digital assets. Many in the sector argue that cryptocurrencies are more akin to commodities and should not be subject to the same disclosure and registration requirements as traditional securities.

SEC Chairman Paul Atkins, appointed under the Trump administration, has indicated a pivot toward a more structured regulatory environment for digital assets. Speaking on May 12, Atkins said that a priority for the Commission would be to create a framework that outlines “clear rules of the road” for issuing, trading, and safekeeping crypto assets, while still targeting bad actors in the space.

Despite the recent pullbacks, the SEC has not ceased all crypto-related enforcement. On May 20, the agency sued Unicoin, alleging the startup and its executives fraudulently raised over $100 million by marketing tokens they said were backed by real estate and equity in yet-to-go-public companies.

President Trump, during his 2024 campaign, pledged to become the “crypto president” and vowed to dismantle the regulatory approach championed by Atkins’ predecessor, Gary Gensler. Since returning to office, Trump’s administration has moved to either withdraw or pause several ongoing SEC enforcement actions targeting cryptocurrency companies.

By fLEXI tEAM