SEC Drops Binance Lawsuit Marking Policy Shift

The U.S. Securities and Exchange Commission (SEC) has made a significant move by dismissing its landmark lawsuit against Binance and its founder, Changpeng Zhao. This decision, announced on May 29, 2025, marks the end of a two-year legal battle that had the potential to reshape the crypto industry. The dismissal, which was filed jointly by both parties, indicates a shift in the regulatory approach towards crypto oversight under the Trump administration.

The SEC's case, initiated in June 2023, accused Binance Holdings, BAM Trading Services, BAM Management U.S. Holdings, and Changpeng Zhao of various violations, including inflating trading volumes, diverting customer funds, and enabling trading in unregistered securities. The voluntary dismissal, filed with prejudice in Washington, D.C., means that the SEC cannot revive these charges, signaling a major policy shift in U.S. crypto regulation.

The court document stated that the SEC believes the dismissal of this litigation is appropriate, though no further explanation was provided. The regulator clarified that this move does not necessarily reflect its stance on other cases. Over the past several months, the case had been in limbo, with both parties requesting stays and extensions, suggesting ongoing negotiations and shifting priorities.

This dismissal follows a tumultuous 2023 for Binance, which included a $4.3 billion settlement with the U.S. Department of Justice over Bank Secrecy Act violations. Zhao and Binance admitted to criminal wrongdoing as part of that settlement and agreed to overhaul their compliance protocols. In response to the SEC's decision, Binance celebrated the outcome, thanking Chairman Atkins and the Trump team for pushing back against regulation by enforcement.

The court filing also referenced the SEC's newly formed crypto task force, which has recently engaged with industry stakeholders. This task force indicates a potential shift in the agency’s regulatory strategy, moving away from the aggressive enforcement style seen during former SEC Chair Gary Gensler’s tenure. The dismissal of the Binance case is part of a broader trend where the SEC has either settled or dropped multiple high-profile cases involving major industry players, including Coinbase, ConsenSys, and Kraken.

Investigations into Circle, Immutable, and others were also quietly closed without further action. Lawsuits against Uniswap and OpenSea have been withdrawn, significantly softening the agency’s stance. This shift in regulatory posture under the Trump administration suggests a move away from aggressive enforcement and toward more structured policymaking in the crypto space. However, it remains unclear how this dismissal might influence other ongoing or future enforcement actions.

For Binance and Zhao, the end of this legal chapter marks a significant win as they continue to navigate global regulatory challenges. The dismissal of the SEC's lawsuit against Binance signals a new era for crypto oversight, one that prioritizes collaborative rulemaking over aggressive enforcement. This development is likely to have far-reaching implications for the crypto industry, as regulators and industry players alike adapt to the evolving regulatory landscape.