Binance and the Securities and Exchange Commission (SEC) jointly requested a pause in their ongoing lawsuit earlier this month. The filing referenced the newly established cryptocurrency task force and the expectation of clearer regulations, particularly regarding whether certain crypto assets should be classified as commodities or securities.
The decision to pause legal action against Binance has increased speculation that similar lawsuits involving other crypto firms, initiated under the previous SEC leadership led by Gary Gensler, may also be put on hold.
Throughout Gensler’s tenure, the agency faced criticism from policymakers and crypto industry stakeholders, who accused it of exceeding its authority and failing to provide regulatory clarity. Under his leadership, the SEC pursued more than a hundred lawsuits against cryptocurrency companies, often for violating securities laws that the firms sought clearer guidance on.
Several crypto company executives have urged the Trump administration to dismiss what they call baseless lawsuits that have entangled the industry in costly and complex legal battles. The newly appointed task force, led by pro-crypto commissioner Hester Peirce, is expected to introduce more definitive regulations before the year ends. The future of crypto regulation hinges on this framework, particularly concerning the classification of digital assets as either commodities or securities.
The temporary suspension of legal proceedings against Binance initiated under the interim SEC chair appointed by the Trump administration marks a potential shift in regulatory approaches toward crypto firms. Market analysts anticipate that additional lawsuits may be paused until the agency establishes clearer guidelines.
Some of the lawsuits likely to be dropped include one against Ripple. The agency accused Ripple of illegally selling securities in 2020 without registration, arguing that XRP transactions violated securities laws. Four years later, a judge ruled that retail sales of XRP did not breach securities laws, marking a major victory for Ripple.
However, the court also determined that institutional sales of XRP did constitute securities violations, leading to a multimillion-dollar fine. Both Ripple and the SEC have since appealed different aspects of the ruling.
The SEC’s case against Coinbase follows a similar legal trajectory, with the agency alleging that the exchange engaged in unregistered securities offerings and operated an illegal staking service. Filed in 2023, the lawsuit claims Coinbase functioned as an unregistered clearing agency, securities exchange, and broker.
In response, Coinbase has taken legal action against the SEC, arguing that the agency has failed to provide proper regulatory guidance. This case may also be paused as Peirce’s task force works on refining regulatory policies.
Similarly, the SEC pursued legal action against Kraken in 2023, accusing it of running an unregistered clearing agency, securities exchange, dealer, and broker. Kraken countered that the SEC had not provided clear directives on compliance requirements. Additionally, the SEC fined the exchange $30 million and shut down its U.S. staking services. However, under the Trump administration, Kraken has since resumed staking operations.
Additionally, the SEC took legal action against Gemini and Genesis, accusing them of unlawfully offering and selling securities through the Gemini Earn lending program. The lawsuit claims that the platform’s lending services violated U.S. securities laws.
The current administration is considering clearer guidelines for lending operations, and this case may be paused along with other similar lawsuits. Major crypto industry players like Stronghold Digital Mining Inc. (NASDAQ: SDIG) will be waiting to see what regulatory clarity is provided by the new federal administration.
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