The Securities and Exchange Commission dropped its 2023 lawsuit against Binance, its U.S. affiliate and its founder Changpeng Zhao Thursday, continuing its trend of vacating lawsuits against cryptocurrency firms filed by the SEC of yesteryear.
This brings to an end a nearly two-year legal battle, in which the SEC accused the crypto exchange of illegally serving high-value U.S. customers and commingling and diverting customer funds.
Under the leadership of then-Chair Gary Gensler, the SEC filed numerous lawsuits against crypto firms such as Binance, accusing them of, among other things, offering unregistered securities. But the SEC of today, led by Chair Paul Atkins, has done an about-face, dropping cases against Coinbase, Kraken, Ripple and Robinhood, and hosting industry roundtables with its new crypto task force.
“The dismissal of the SEC’s case against Binance is a landmark moment. We’re deeply grateful to Chairman Paul Atkins and the Trump administration for recognizing that innovation can’t thrive under regulation by enforcement. The U.S. is back - leading from the front in the future of blockchain,” a Binance spokesperson told Banking Dive via email.
A spokesperson for the exchange's U.S. affiliate, Binance.US, said the dismissal “confirm[s] what we have always known—that the company did not violate U.S. securities laws.” The dismissal, a major milestone, allows Binance.US to “work on restoring our relationships that were impacted by the SEC,” the spokesperson said.
The SEC had no further comment beyond its litigation release.
Prior to the SEC lawsuit, Binance and Zhao were sued by the Commodity Futures Trading Commission over compliance “evasion,” and in late 2023 the Justice Department charged Zhao with violating the Bank Secrecy Act. He pleaded guilty to the charge, paid a $50 million fine and was sentenced to four months in federal prison in 2024.
The abandonment of the SEC’s lawsuit against Binance comes one week after the international crypto exchange, the world’s largest by trading volume, announced it would list World Liberty Financial USD on May 22. WLF is owned by the family of President Donald Trump, and was created two months before Trump won the presidential election.
Trump, a former crypto skeptic, is involved in the crypto sector through WLF and the more recent launch of his meme coin. He has laid out his intentions to make the U.S. “the crypto capital of the planet” through executive orders and the nomination of several crypto-friendly regulators, including Atkins.
Amanda Fischer, policy director and chief operations officer of financial policy group Better Markets, said that the SEC ending its legal pursuit of Binance “marks a new low in the SEC’s already disgraceful recent history of surrendering in crypto cases, regardless of the merits and even when the agency is winning in court.”
“By dropping all charges notwithstanding prevailing in the early stages of the litigation, the SEC is dangerously sullying its own reputation,” Fischer said. “In an almost comical admission, Binance’s own Chief Compliance Officer confessed in private chats that the firm was ‘operating as a fking unlicensed securities exchange in the USA bro.’ And while the Department of Justice’s previous case against Binance and CZ resulted in a minimalist charge not nearly commensurate with the harm caused, it is even more shocking that the SEC has surrendered even though the Binance founder has already admitted to myriad violations and spent time in jail for those crimes.”
