The U.S. government has officially dropped its civil lawsuit against Binance, one of the largest crypto exchanges globally. The decision, made public on Thursday, signals a shift in how the SEC is approaching digital currencies under the Trump administration.
The dismissal was filed jointly by attorneys representing Binance, the SEC, and the exchange’s founder, Changpeng Zhao, in a Washington, D.C. federal court. According to the SEC, this move was made as a matter of policy and at the agency’s discretion.
A spokesperson for Binance welcomed the decision, calling it a significant moment for the industry and expressing appreciation for SEC Chair Paul Atkins and President Trump. The statement praised the administration’s willingness to support innovation without relying solely on punitive regulation.
Donald Trump, during his 2024 presidential campaign, pledged to become a pro-crypto leader. He accepted cryptocurrency donations and promised to roll back restrictions put in place by former SEC Chair Gary Gensler. Since returning to office, the SEC under Trump has paused or withdrawn several enforcement actions targeting crypto firms. Trump even launched his own crypto and hosted a private event for its top backers.
The lawsuit against Zhao and Binance, originally filed in June 2023, accused the company of engaging in deceptive practices. These included manipulating trading volumes, misleading users about internal monitoring systems, and misusing customer funds. Additionally, the SEC alleged that Binance allowed trading of several tokens it considered unregistered securities, violating federal law during the Biden administration.
The lawsuit was separate from the company’s earlier legal troubles. In November 2023, the company admitted guilt and paid a $4.32 billion fine for breaching sanctions and anti-money laundering regulations. Changpeng Zhao also pleaded guilty, resigned as CEO, and completed a four-month prison sentence, gaining release last September.
Earlier this year, in February, the SEC also dropped a separate case against Coinbase, the biggest crypto exchange in the United States. That case had involved allegations of facilitating trading in multiple unregistered crypto tokens.
For years, the crypto sector has pushed back against attempts to regulate digital currencies using traditional securities laws. Many in the sector argue that tokens should be treated more like commodities, which would subject them to fewer disclosure requirements. On May 12, SEC Chair Atkins stated that building a transparent and effective regulatory system—one that balances investor protection with innovation—would be one of his top goals moving forward.
Whether he makes good on this pledge, and how quickly that happens, will be closely watched by many in the crypto industry, including entities like Bit Digital Inc. (NASDAQ: BTBT)
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