The U.S. Securities and Exchange Commission (SEC) recently made headlines by officially ending its civil case against Binance, which is known as the world’s largest crypto exchange. This significant decision is particularly noteworthy as it reflects a broader shift in regulatory attitudes under President Donald Trump’s second term.
According to Reuters, the SEC filed a joint stipulation in federal court, alongside Binance and its founder Changpeng Zhao, agreeing to dismiss the case. The SEC stated that this decision was made “in the exercise of its discretion and as a policy matter,” stressing that it does not represent a broader stance on ongoing or future cryptocurrency litigation. Importantly, the dismissal was made “with prejudice,” meaning the SEC cannot reconsider the case in the future.
Binance celebrated the dismissal as a significant victory. A spokesperson from the company described it as a “landmark moment,” expressing gratitude toward SEC Chairman Paul Atkins and the Trump administration for their recognition that innovation often struggles to survive under a regime of strict regulatory enforcement. However, the SEC has not issued further commentary on this development.
The civil case, which originated in June 2023 during the Biden administration, accused Binance and Zhao of serious misdeeds. Allegations included inflating trading volumes, misappropriating customer assets, and misleading investors about security practices. At the time, the SEC claimed that Binance facilitated the trading of various cryptocurrency tokens classified as unregistered securities, thus falling under the SEC’s regulatory purview.
For those interested in the interplay between regulation and innovation, it’s important to note that this civil suit was distinct from a prominent criminal investigation that concluded in November 2023. In that separate case, Binance admitted to violating federal anti-money laundering and sanctions laws, resulting in a hefty penalty of $4.32 billion. Zhao himself faced legal repercussions, serving a four-month prison sentence before being released in September 2024.
The dismissal of the Binance case comes alongside broader regulatory shifts within the cryptocurrency landscape. Earlier this year, the SEC also dropped a similar case against Coinbase, the largest U.S.-based crypto exchange, which had faced allegations of allowing trading in numerous unregistered tokens. These recent actions may signal a trend toward a more lenient regulatory environment under the Trump administration, contrasting sharply with the more aggressive posture adopted by the SEC under Biden.
The cryptocurrency industry has consistently resisted efforts to categorize digital tokens under traditional securities laws. Advocates argue that many digital assets should instead be viewed as commodities. With this latest dismissal of the lawsuit against Binance, industry players may feel emboldened in their efforts to push for a regulatory framework that is less burdensome.
Source: Reuters
