In a development that could reshape the regulatory landscape for digital assets in the U.S., the Securities and Exchange Commission (SEC) has officially dropped its high-profile lawsuit against Binance, one of the world’s largest cryptocurrency exchanges, and its co-founder Changpeng Zhao. This move, made public in a joint court filing on May 29, effectively ends a legal dispute that has hovered over the crypto industry for nearly two years.
Filed in a Washington, D.C. federal court, the joint motion was submitted by the SEC, Binance, and Zhao. It requests the court to formally dismiss the case, and notably, it does so “with prejudice” — meaning the SEC cannot revive the same allegations in the future.
This sudden reversal comes after months of mounting speculation that the SEC’s Crypto Assets and Cyber Unit — sometimes referred to as the Crypto Task Force — might be reassessing its aggressive enforcement-first stance. The motion cited that this internal reassessment “might impact and facilitate the potential resolution of this litigation,” suggesting a larger policy pivot is at play.
A Legal Battle Comes to a Close
The SEC originally launched its case against Binance, Zhao, and the exchange’s U.S. affiliate BAM Trading in June 2023. At the heart of the complaint were accusations of securities law violations, mismanagement of customer assets, and a lack of transparency with investors. The charges were serious and added to the mounting regulatory pressure facing the crypto sector under the Biden administration.
However, the legal saga began to slow earlier this year. The case was put on pause twice — once in February and again in April — signaling that behind-the-scenes negotiations or strategic recalculations were underway.
While this SEC case has now concluded, it’s worth noting that Binance had already settled a separate criminal investigation with the U.S. Department of Justice back in November 2023. That case ended with Binance agreeing to pay a staggering $4.3 billion in fines and admitting to violations involving sanctions compliance, unlicensed money transmission, and inadequate anti-money laundering controls.
As part of that DOJ deal, Zhao stepped down from his role as CEO and later pled guilty to a money laundering charge. He was sentenced to four months in prison in April 2024.
Reactions and Ripple Effects
Shortly after the motion to dismiss was filed, Binance took to social media to celebrate what it described as a “huge win for crypto.” The exchange also extended thanks to former President Donald Trump and recently appointed SEC Chair Paul Atkins, crediting them with moving the agency away from its prior strategy of “regulation by enforcement.”
Indeed, this move aligns with a broader shift within the SEC under new leadership. Since Trump re-entered the political spotlight and installed Paul Atkins — a former crypto industry advocate — as the head of the SEC, the agency has been softening its posture toward the sector.
Several other enforcement actions brought during the Biden administration have also been quietly shelved or settled. High-profile cases involving Coinbase, ConsenSys, and Kraken have seen similar resolutions, and investigations into Circle, Immutable, and OpenSea have ended without further action.
A New Regulatory Chapter?
Atkins, who previously worked closely with crypto lobbyists, has signaled that his tenure will focus on collaboration rather than confrontation. He has already initiated a series of policy roundtables aimed at bringing regulators and crypto leaders together to craft a framework that works for both innovation and investor protection.
With the SEC’s legal retreat from Binance and its recent pattern of softened enforcement, the American crypto sector could be entering a more constructive phase. Whether this new direction will spur innovation or invite renewed scrutiny remains to be seen, but for now, the dismissal marks a definitive shift in how Washington engages with crypto.
For Binance, and perhaps the wider industry, it’s a moment of cautious optimism — a potential turning point after years of legal uncertainty.
