In a significant development that signals a shift in U.S. regulatory strategy under the new administration, the Securities and Exchange Commission (SEC) has voluntarily withdrawn its civil enforcement lawsuit against Binance. The move reflects an evolving federal stance on digital asset regulation following President Donald Trump’s return to the White House.
A formal notice of dismissal was jointly submitted on Thursday by legal representatives of the SEC, Binance, and the exchange’s founder, Changpeng Zhao. The filing, made at a federal court in Washington, D.C., officially ends the high-profile case, which had been a focal point in the U.S. government’s aggressive oversight of the crypto industry in recent years.
In the court document, the SEC stated that it had decided to withdraw the case as a matter of policy and discretion. Notably, the regulator clarified that this decision should not be interpreted as an indication of its stance on other active or future cases involving digital assets. The case was dismissed “with prejudice,” a legal term that prevents the SEC from re-filing the same complaint against Binance or Zhao.
Binance, in its reaction to the development, hailed the decision as a major victory for the cryptocurrency sector. A spokesperson for the company expressed appreciation to SEC Chairman Paul Atkins and President Trump, stating, “This is a landmark moment. We’re deeply grateful to Chairman Atkins and the Trump administration for acknowledging that true innovation in the digital economy cannot thrive under regulation by enforcement.”
The SEC declined to issue any further comments beyond the court filing.
The lawsuit, which was initially filed in June 2023 under the administration of then-President Joe Biden, accused Binance of several serious violations. These included allegations of artificially inflating trading volumes, diverting customer funds, misleading investors regarding the platform’s market surveillance practices, and facilitating trading in tokens that were believed to fall under the legal definition of securities.
In addition to the SEC lawsuit, Binance had previously faced separate criminal charges. In November 2023, the exchange admitted guilt and agreed to pay a $4.32 billion penalty after U.S. prosecutors charged it with breaching anti-money laundering and sanctions regulations. Zhao himself pleaded guilty to related charges and completed a four-month prison term, gaining release in September 2024.
This recent dismissal is not an isolated instance. Earlier in February, the SEC also dropped a separate legal action against Coinbase, the largest U.S.-based cryptocurrency exchange. That case involved claims that Coinbase had facilitated the trading of more than a dozen unregistered tokens. These back-to-back dismissals suggest a broader recalibration in how the U.S. plans to manage digital assets under Trump’s leadership.
Under the Biden-era SEC led by Gary Gensler, the agency had taken a hardline approach, categorizing many cryptocurrencies as securities and seeking to impose strict compliance requirements on industry players. This position was a source of considerable tension between regulators and crypto companies, many of which argue that digital tokens more closely resemble commodities than traditional securities.
The implications of labeling tokens as securities are significant. Such a designation would require issuers and exchanges to register with the SEC, adhere to complex disclosure rules, and subject themselves to rigorous oversight, a process that many in the industry view as burdensome and stifling to innovation.
However, since Paul Atkins took over the SEC chairmanship following Trump’s re-election, the regulatory approach appears to be shifting. In remarks made on May 12, Atkins emphasized the importance of building a comprehensive and transparent regulatory framework. He highlighted the need for “clear rules of the road” to guide the issuance, trading, and safekeeping of digital assets, while simultaneously cracking down on genuine misconduct in the sector.
Still, not all crypto-related enforcement actions have been shelved. On May 20, the SEC filed a fresh lawsuit against Unicoin, a startup accused of raising over $100 million through misleading claims that its tokens were backed by real estate and company equity. The case signals that while the SEC may be retreating from broad-based crackdowns, it is still prepared to intervene in instances of suspected fraud.
President Trump, during his 2024 campaign, pledged to foster a more supportive regulatory climate for blockchain and crypto innovation. Promising to become the “crypto president,” he has vowed to roll back the regulatory aggression seen during the Biden administration. Since taking office, his administration has either withdrawn or paused multiple enforcement cases, sparking renewed optimism within the digital finance community.
With the SEC stepping back from high-profile cases and signaling an openness to rethinking digital asset rules, industry leaders are hopeful that a more balanced and innovation-friendly environment is on the horizon. As legal clouds begin to lift from some of the sector’s biggest players, the future of crypto regulation in the United States may now rest on forging consensus-driven policies that balance investor protection with technological advancement.
