US SEC Voluntarily Dismisses Lawsuit Against Binance and Founder CZ

The U.S. Securities and Exchange Commission (SEC) has officially dropped its civil lawsuit against Binance Holdings Ltd and its majority shareholder, Changpeng Zhao, per Reuters. This voluntary dismissal marks the end of a two-year legal battle that began in June 2023. 

Background: The SEC’s Lawsuit Against Binance

In June 2023, the SEC filed a lawsuit accusing Binance, the world’s largest cryptocurrency exchange, and its founder Zhao, of multiple violations. The charges alleged that Binance artificially inflated its trading volumes, diverted customer funds, and misled investors about its surveillance and compliance controls. 

Additionally, the SEC accused Binance of facilitating the trading of cryptocurrency tokens that, according to the agency’s leadership during the Biden administration, should have been registered as securities.

This lawsuit was separate from Binance’s earlier criminal case. In November 2023, Binance pleaded guilty to violations related to anti-money laundering (AML) and sanctions laws. The exchange paid $4.32 billion in penalties to the U.S. Department of Justice and an additional $2.85 billion to settle with the Commodity Futures Trading Commission (CFTC). 

Zhao himself pleaded guilty to one money laundering violation and served a four-month prison sentence before stepping down as CEO. Despite these penalties, Zhao remains Binance’s majority shareholder.

The Voluntary Dismissal: What It Means

On May 29, 2025, a joint stipulation of dismissal was filed in a Washington, D.C. federal court by the lawyers representing the SEC, Binance, and Zhao. The dismissal was made “with prejudice,” meaning the SEC cannot reopen or pursue the case again.

The SEC stated the decision to dismiss was “appropriate in the exercise of its discretion and as a policy matter.” However, the agency clarified this dismissal does not reflect a broader change in its stance on other cryptocurrency litigation. 

In other words, while the lawsuit against Binance is over, the SEC’s regulatory efforts on crypto continue, albeit with some changes in enforcement style.

A Landmark Moment for Crypto Innovation

Binance called the SEC’s decision a “Huge win.” A spokesperson for the exchange expressed gratitude to SEC Chairman Paul Atkins and the Trump administration for recognizing that “innovation can’t thrive under regulation by enforcement.” 

This statement underscores a long-standing tension between crypto companies and regulators. Many in the crypto industry have argued that heavy-handed enforcement stifles innovation, pushing projects underground or overseas.

The dismissal of Binance’s case comes on the heels of similar moves by the SEC under the Trump administration. Earlier in 2025, the SEC voluntarily dropped a separate enforcement action against Coinbase, the largest U.S. crypto exchange. 

Regulatory Shifts Under the Trump Administration

The dismissal comes amid President Donald Trump’s return to the White House and his campaign promise to become a “crypto president.” Trump has vowed to reverse the crackdown on the crypto industry that took place under SEC Chair Gary Gensler during the Biden administration.

Paul Atkins, the current SEC chairman, has signaled a change in tone. On May 12, he emphasized the importance of developing a “regulatory framework that establishes clear rules of the road” for issuing, trading, and safekeeping crypto assets. He also stressed the need to discourage bad actors without stifling innovation.

The SEC’s recent behavior supports this vision. Several high-profile lawsuits—including those against Ripple and Coinbase—have been dismissed or put on hold.

The Broader Impact on the Crypto Industry

Binance, despite its earlier legal troubles, remains a dominant player in the crypto space. Its ability to continue operating without the cloud of this lawsuit will reassure investors, traders, and partners.

Moreover, the dismissal reinforces the argument by many crypto advocates that tokens should be treated more like commodities than securities. Under the Biden administration, the SEC sought to classify many tokens as securities, which would subject crypto firms to stricter registration and disclosure requirements. 

The Trump administration’s approach appears to favor a lighter regulatory touch, which could encourage more innovation and investment in the U.S. crypto market.

While this lawsuit is over, Binance is not free from regulatory scrutiny. The company’s earlier settlements with the DOJ and CFTC remain in effect, and the crypto exchange must maintain compliance with anti-money laundering and sanctions laws.

The SEC’s dismissal does not mean the agency has abandoned crypto regulation altogether. The agency continues to investigate other projects, as seen with recent actions against startups like Unicoin, accused of fraudulent token sales.

For Binance, the dismissal allows it to focus on growth and innovation without the burden of a drawn-out legal battle with the SEC. For the industry at large, it offers hope for a regulatory environment that balances protection with progress.