US Securities and Exchange Commission dismisses lawsuit against Binance crypto exchange

NEW YORK – The US Securities and Exchange Commission (SEC) on May 29 voluntarily dismissed its civil lawsuit against Binance, the world’s largest cryptocurrency exchange, extending the regulator’s new approach to cryptocurrencies since President Donald Trump re-entered the White House.

A joint stipulation of dismissal signed by lawyers for the SEC, Binance and Binance founder Zhao Changpeng was filed in the Washington, DC, federal court.

The SEC said dismissing the enforcement case was appropriate “in the exercise of its discretion and as a policy matter”, and did not reflect its view on other cryptocurrency litigation.

Its dismissal is with prejudice, meaning the SEC cannot pursue the case again.

In a statement, a Binance spokesperson called the dismissal “a landmark moment”.

He added: “We’re deeply grateful to (SEC) chairman Paul Atkins and the Trump administration for recognising that innovation can’t thrive under regulation by enforcement.”

Mr Trump promised during his 2024 White House run to be a “crypto president”, and pledged to reverse an industry crackdown overseen by Mr Atkins’ predecessor Gary Gensler. The SEC has since withdrawn or put on hold many cryptocurrency enforcement cases.

The SEC sued Binance and Mr Zhao in June 2023, accusing the exchange of artificially inflating trading volumes, diverting customer funds and misleading investors about its surveillance controls.

Binance was also accused of unlawfully facilitating trading of several cryptocurrency tokens that SEC leadership during President Joe Biden’s administration believed should have been registered as securities.

The case was separate from Binance’s November 2023 guilty plea and US$4.3 billion (S$5.6 billion) criminal penalty for violating federal anti-money laundering and sanctions laws through lapses in internal controls.

Mr Zhao pleaded guilty to anti-money laundering violations, and was released from prison in September 2024 after serving a four-month sentence.

In February, the SEC dismissed a separate enforcement case accusing Coinbase, the largest US cryptocurrency exchange, of arranging trading in at least 13 unregistered tokens.

The crypto industry has long chafed over regulatory efforts to apply federal securities laws to digital assets, with many companies likening tokens to commodities.

Classifying tokens as securities would require cryptocurrency companies to register with the SEC and disclose more to investors.

Mr Atkins said on May 12 that developing a regulatory framework that establishes “clear rules of the road” for issuing, trading and safekeeping crypto assets, while discouraging lawbreakers, would be a key priority.

On May 20, the SEC sued Unicoin, accusing the start-up and executives of fraudulently raising more than US$100 million to launch tokens they claimed were safe and backed by real estate and equity in companies that had yet to go public. REUTERS