Is the Binance legal battle concluding, leaving behind questions about the extent of damage inflicted by the lawsuit?
U.S. Securities and Exchange Commission (SEC) Drops Lawsuit Against Binance
In a surprising turn of events, the U.S. Securities and Exchange Commission (SEC) has withdrawn its lawsuit against cryptocurrency exchange giant, Binance, and its CEO, Changpeng Zhao. The dismissal, filed in a Washington, D.C. federal court on May 29, comes after nearly two years of legal tussle surrounding allegations of securities law violations.
The decision, dismissed with prejudice, means the case cannot be reopened, and signifies a significant conclusion to one of the biggest legal battles in the crypto industry's recent history. The SEC's move is considered a rare outcome in regulatory disputes of this scale.
Binance, which transacted an estimated $7.35 trillion in trading volume in 2024 despite facing regulatory scrutiny in the U.S., called the outcome a "landmark moment." On the other hand, the SEC, in its official statement, said the dismissal was appropriate "in the exercise of its discretion and as a policy matter."
The SEC's clarification, however, advised that the dismissal does not reflect its view on other crypto litigation, leaving the door open for different strategies in ongoing cases. Notably, the dismissed case followed the return of Donald Trump to the White House and the appointment of Paul Atkins, a pro-market regulation advocate, as the new SEC Chairman.
Under the former administration, the SEC had maintained a tough stance towards cryptocurrency firms, aggressively pursuing enforcement actions against major platforms like Binance and Coinbase. In February 2025, the SEC quietly requested a 60-day pause in the Binance proceedings, hinting at the possibility of a negotiated settlement. This suggestion became clearer after the SEC also dropped its case against Coinbase the same month.
While the SEC has not shared reasons for its reversal, critics have raised concerns over the perceived selective disengagement. Some argue that this shift may create the impression that regulatory pressure in the crypto sector can be turned on or off depending on political alignment. A group of House Democrats recently cited a separate case involving Justin Sun, the founder of TRON, whose SEC fraud charges were reportedly dropped after he invested $75 million in a Trump-linked venture.
The precise terms behind Binance's legal resolution remain unclear. No fines or admissions were part of the dismissal, and no quid pro quo has been disclosed.
The SEC's lawsuit against Binance originated from June 2023, when the agency filed a wide-ranging civil complaint accusing Binance Holdings, its U.S. arm Binance.US, and Zhao of violating multiple securities laws. The complaint alleged that Binance misled investors, manipulated trading volumes, and failed to separate customer assets from company funds. The platform was accused of enabling high-value U.S. users to access its unregulated international exchange despite claiming otherwise. The SEC listed at least 13 tokens, including Solana, Cardano, and Polygon, as unregistered securities. Binance denied the allegations, criticizing the SEC for refusing to provide clear rules for the industry.
The litigation resulted in significant market impact, with customers withdrawing roughly $790 million from Binance platforms in the 24 hours following the filing. Liquidity on Binance.US fell sharply, and Bitcoin and other major assets also dropped by 4-5% in value, mirroring widespread crypto market fear.
The dismissal of the SEC lawsuit in May 2025 changes the legal backdrop but may not immediately affect the existing market structure. Although Binance.US is no longer under the shadow of the SEC civil case, it continues to face practical hurdles concerning user trust, banking relationships, and market liquidity. Meanwhile, Coinbase and Kraken, both of which have similarly cleared their legal clouds, will likely benefit from the reduced competition.
Binance's global operation implications remain less clear. Reentering the U.S. market in a meaningful way would require compliance with emerging federal frameworks, still under development. Until those rules are finalized, any expansion carries new compliance risks.
Although the SEC's case against Binance has ended, the cryptocurrency exchange continues to navigate regulatory challenges globally, with friction in Europe, Asia, Africa, and other regions impacting its market position and user trust.
- The SEC's dismissal of its lawsuit against Binance, despite allegations of securities law violations, marks a significant conclusion to one of the biggest legal battles in the crypto industry's recent history.
- The decision to drop the lawsuit against Binance and CEO Changpeng Zhao was appropriate, according to the SEC, in the exercise of its discretion and as a policy matter.
- The SEC's move is considered a rare outcome in regulatory disputes of this scale, and Binance called the outcome a "landmark moment."
- The SEC's dismissal does not reflect its view on other crypto litigation, leaving the door open for different strategies in ongoing cases.
- The dismissed case against Binance followed the return of Donald Trump to the White House and the appointment of Paul Atkins, a pro-market regulation advocate, as the new SEC Chairman.
- In February 2025, the SEC quietly requested a 60-day pause in the Binance proceedings, hinting at the possibility of a negotiated settlement, a suggestion that became clearer after the SEC also dropped its case against Coinbase the same month.
- The cryptocurrency exchange Tron's founder, Justin Sun, had his SEC fraud charges dropped after he invested $75 million in a Trump-linked venture, raising concerns over perceived selective disengagement in regulatory cases.
- The dismissal of the SEC lawsuit against Binance may not immediately affect the existing market structure, as Binance.US continues to face practical hurdles concerning user trust, banking relationships, and market liquidity.
