WASHINGTON, D.C. – May 29, 2025 — In a surprising but strategically nuanced move, the U.S. Securities and Exchange Commission (SEC) officially dropped its nearly two-year-old lawsuit against Binance, one of the world’s largest cryptocurrency exchanges, and its founder Changpeng Zhao (CZ). The dismissal, made via a joint stipulation filed in federal court, brings to a close one of the most high-stakes legal battles initiated in the Biden administration era .
A Legal Odyssey Ends
The lawsuit—first filed in June 2023—alleged that Binance had operated an unregistered securities exchange, artificially inflated trading volumes, misappropriated customer funds, and defrauded U.S. investors. Binance and Zhao previously resolved separate criminal charges with the U.S. Department of Justice and pleaded guilty in November 2023 to violations of anti-money laundering laws, resulting in a record-setting $4.3 billion settlement and a prison sentence for CZ.
Despite the severity of these earlier allegations, the SEC’s lawsuit was officially withdrawn “with prejudice,” meaning the agency cannot refile it in the future . The DOJ settlement had resolved the criminal aspect, but the SEC case remained separate—until now.
News of the dismissal comes amid clear leadership changes at the SEC. Under newly appointed Chair Paul Atkins—an appointee of the Trump administration—the agency has adopted a more measured stance, shifting from aggressive enforcement to a regulatory approach that emphasizes industry collaboration.
Previously, the SEC had aggressively pursued crypto firms. During Gary Gensler’s term as chair, the agency filed high-profile cases against Binance, Coinbase, Ripple, Kraken, and Robinhood, pushing a narrative of “regulation by enforcement” rather than clear legislative guidelines. But with key Biden-era actions either resolved or withdrawn—such as Coinbase in February 2025 and Kraken and Ripple earlier—Binance was among the final remaining targets.
In February, the SEC requested a 60-day pause, hinting at behind-the-scenes negotiations and signaling the case might be dropped.
“A Huge Win for Crypto”
Binance reacted swiftly. In a statement, the exchange called the dismissal “a landmark moment” and thanked Chair Atkins and the Trump administration for steering the agency away from what it described as “regulation by enforcement”. The sentiment was echoed by industry players who saw the dismissal as validation of crypto’s legitimacy in the eyes of regulators.
What This Means for Binance and the Industry
1. Legal clarity and reduced risk
While Binance still faces regulatory scrutiny from other agencies and jurisdictions, the SEC’s withdrawal removes a major legal cloud over its U.S. operations. Binance.US welcomed the news, stating that the dismissal affirms their long-held belief that they complied with U.S. securities laws.
2. Market Reaction
Crypto markets reacted enthusiastically. Bitcoin, Ethereum, BNB, and other leading tokens soared on the news, as investor sentiment shifted positively. Although Bitcoin experienced a modest pullback shortly after—as often happens following initial spikes—the narrative for a bullish crypto cycle remains intact.
3. Regulatory atmosphere evolves
This case marks a pivotal moment in U.S. crypto regulation. With enforcement waning and the SEC establishing a new Crypto Task Force aimed at crafting clearer frameworks, the path forward looks more structured and cooperative.
Yet, not all reactions were celebratory. Critics—including consumer advocacy groups like Better Markets—warned against dismissing the SEC case, arguing that it might send a message that enforcement is optional. They suggest it could embolden firms to operate in legal gray zones without sufficient oversight.
This development aligns with other notable shifts at U.S. regulatory bodies:
- Coinbase, Kraken, Ripple, Uniswap, and Gemini have all seen enforcement pressure ease, either through case withdrawals or settlements.
- The House recently introduced the Digital Asset Market Clarity (CLARITY) Act, while the Senate advanced the GENIUS Act to regulate stablecoins—both enjoying bipartisan support.
- With the SEC’s Crypto Task Force now actively drafting policy, it appears Washington is seeking a new legislative path forward for digital assets .
With enforcement actions receding, the spotlight now shifts to the text of new laws and guidelines. Drafts like the CLARITY Act, GENIUS Act, and bills focused on digital asset frameworks will shape the industry more directly than court battles.
The SEC’s next move could involve formal rulemaking, potentially seeking:
- Reformulated definitions of securities vs. commodities
- Enhanced disclosure standards
- Clearer boundaries for token issuers and exchanges
Industry stakeholders, from crypto platforms to institutional investors, will be closely monitoring these developments. A stable, transparent, and well-defined regulatory framework is now the shared priority.
The SEC’s decision to drop the Binance lawsuit isn’t just a single regulatory event—it symbolizes a broader shift in U.S. crypto policy. Enforcement is giving way to engagement, legal battles are yielding to legislative action, and once fringe innovations are entering mainstream finance discussions.
While enforcement setbacks may worry some, thoughtful regulation promises a new era of clarity and legitimacy. As policymakers, investors, and technologists press forward, the Binance dismissal marks the opening act of a larger regulatory transformation for digital assets in the United States.