Trump-Era SEC Drops Binance Lawsuit

In a move marking a significant shift in regulatory policy under President Donald Trump’s second term, the U.S. Securities and Exchange Commission (SEC) has formally ended its civil enforcement action against Binance, the world’s largest cryptocurrency exchange. The case dismissal was made official through a joint filing in a federal court in Washington, D.C., on May 29, according to court records reviewed by Reuters.

The SEC clarified that the decision to terminate the lawsuit was grounded in broader policy considerations and not an endorsement of Binance’s previous conduct or a change in the agency’s overall stance on digital assets. The dismissal, issued with prejudice, ensures that the SEC cannot pursue this particular case again in the future.

Representatives for Binance welcomed the development, calling it a pivotal moment for the crypto industry. The company expressed appreciation toward SEC Chairman Paul Atkins and the Trump administration, stating that regulatory approaches based on enforcement hinder innovation. This sentiment echoes a long-standing criticism from the crypto sector regarding the SEC’s historical reliance on litigation rather than structured rulemaking.

Details of the SEC’s Case Against Binance

The SEC’s legal action against Binance began in June 2023 under the Biden administration. The agency accused Binance and its founder, Changpeng Zhao (commonly referred to as CZ), of several violations, including inflating transaction volumes, misusing customer funds, and misrepresenting its internal compliance systems. The agency also alleged that the exchange facilitated the trading of tokens considered unregistered securities under prevailing regulatory definitions at the time.

It is important to note that this civil lawsuit was separate from Binance’s criminal case, which concluded in November 2023. In that matter, Binance admitted to breaching U.S. anti-money laundering and sanctions laws, agreeing to a historic $4.32 billion settlement. CZ, who served a four-month prison sentence, was released in September 2024.

The decision to halt the Binance case follows a similar action taken earlier this year. In February 2025, the SEC also dismissed its civil lawsuit against Coinbase, the largest U.S.-based cryptocurrency exchange. That case had accused Coinbase of facilitating trading in at least 13 unregistered securities. Both reversals are seen as emblematic of a strategic shift in enforcement policy under Chairman Atkins.

Regulatory Philosophy Under Paul Atkins

SEC Chairman Paul Atkins has emphasized the importance of creating transparent and consistent regulations for digital assets. In a recent address, he outlined his intention to establish clearly defined rules for the issuance, trading, and custody of cryptocurrencies. His comments suggested a regulatory approach aimed at nurturing innovation while preventing misconduct, rather than relying solely on punitive measures.

Industry participants have long criticized the SEC for failing to provide adequate guidance and instead pursuing aggressive enforcement actions. Many argue that classifying most tokens as commodities would more appropriately place them under the jurisdiction of other federal agencies, such as the Commodity Futures Trading Commission (CFTC).

The SEC’s withdrawal from high-profile enforcement actions against both Binance and Coinbase signals a potential change in how the federal government will engage with the crypto sector. For now, it suggests a more favorable regulatory climate for blockchain companies operating within the United States.

However, the SEC has not entirely stepped back from its enforcement capabilities. The agency has made it clear that while certain cases have been dismissed, future regulatory actions remain on the table for entities found violating federal laws.