SEC drops Binance lawsuit, ending one of last remaining crypto enforcement actions

The Securities and Exchange Commission (SEC) has officially ended its legal case against Binance and its founder Changpeng Zhao, closing one of the last remaining cryptocurrency enforcement actions by the agency. The lawsuit, initially filed in June 2023, accused the crypto exchange of various violations, such as serving U.S. users unlawfully, manipulating trading volumes, and mixing customer funds. Additionally, the SEC alleged that Binance facilitated trading in unregistered crypto assets considered securities, a claim also made against other platforms like Coinbase and Kraken under previous SEC leadership.

The dismissal of the case signifies the conclusion of a significant crackdown on cryptocurrencies in the U.S. and coincides with efforts by the Trump administration to demonstrate support for the industry. The Justice Department has disbanded its crypto enforcement team, and the Commodity Futures Trading Commission is now led by a venture capitalist with strong connections to the crypto sector.

Binance, the largest digital asset exchange globally, recently partnered with World Liberty Financial, a project aiming to become a crypto bank and allocate 75% of profits to entities associated with the Trump family. The exchange secured a $2 billion investment from the Emirati state fund MGX in USD1, a new stablecoin from the World Liberty team. Furthermore, Binance and World Liberty are expanding their presence in Pakistan, where WLF co-founder Zack Witkoff, son of U.S. Middle East envoy Steve Witkoff, struck a deal with the government. In parallel, Zhao was appointed as an advisor to Pakistan’s newly established Crypto Council, a government-backed body overseeing national digital asset regulations.

Following a $4.3 billion settlement with the U.S. government last year, which resulted in Zhao stepping down as CEO and avoiding jail time while retaining his wealth, the SEC was the final major regulator pursuing Binance. The agency’s motion to dismiss the case was granted with prejudice, preventing the SEC from re-filing the same claims.

SEC Commissioner Hester Peirce emphasized a shift towards clearer rulemaking in the crypto space after years of uncertainty, underscoring the importance of enforcing rules without giving scammers a free pass. The SEC’s new leadership has moved towards engagement and regulatory simplification, including dismantling previous rules hindering Wall Street involvement in crypto. Recent guidance from the agency also indicated that most meme coins are not considered securities under federal law, benefiting projects like the $TRUMP token linked to the Trump family’s ventures.