On Thursday, the United States voluntarily dropped its civil lawsuit against Binance, the largest cryptocurrency exchange globally, signalling a shift towards a more cooperative stance on cryptocurrency from the Securities and Exchange Commission (SEC). This change follows the return of Donald Trump to the White House.
A dismissal agreement, signed by legal representatives from the SEC, Binance, and its founder Changpeng Zhao, was submitted to the federal court in Washington DC. This dismissal is permanent, preventing any future attempts to reactivate the case. The SEC described this decision as fitting within its discretion and an appropriate policy move.
Binance hailed the dismissal as a pivotal moment, expressing gratitude to SEC Chairman Paul Atkins and the Trump administration for acknowledging the need for innovation rather than regulation via enforcement. An SEC representative did not offer further comments.
During his 2024 presidential campaign, Trump committed to being a “crypto president,” marking a significant shift in the political landscape by being the first major candidate to accept cryptocurrency donations and promising to reverse previous regulatory crackdowns initiated under former SEC Chairman Gary Gensler. This shift has led to the SEC halting numerous cryptocurrency enforcement actions since Trump’s return. Trump also introduced a cryptocurrency and hosted a dinner for major investors in this digital asset.
The SEC initially filed suit against Binance and Zhao in June 2023, alleging that the exchange manipulated trading volumes, misappropriated customer funds, and provided misleading information regarding its surveillance capabilities. Furthermore, Binance was accused of enabling the trade of numerous cryptocurrency tokens that were believed, under the Biden administration, to qualify as securities.
This lawsuit was distinct from Binance’s guilty plea in November 2023, resulting in a $4.32 billion criminal fine due to violations of anti-money laundering regulations. Zhao was personally implicated, pleading guilty to money laundering, resigning as CEO, and serving a four-month prison term before his release last September.
In February, the SEC similarly dismissed a separate case against Coinbase, the largest US cryptocurrency exchange, which was accused of facilitating trades on several unregistered tokens.
The crypto industry has long resisted regulatory efforts to classify digital assets under federal securities laws, with many companies preferring to label tokens as commodities to avoid the obligations that come with securities registration and investor disclosures.
Atkins has previously emphasised that establishing a clear regulatory framework for the issuance, trading, and custody of crypto assets, while deterring illegal activities, is a necessary priority moving forward.