SEC Drops Investigation against Binance, Signaling a Retreat in Crypto Regulatory Actions
The U.S. Securities and Exchange Commission (SEC) has announced its decision to withdraw the legal battle against Binance, signaling a notable development in the agency's wider retreat from crypto enforcement under the current administration. In a joint filing submitted to a federal court in Washington, D.C., on May 29, the SEC, Binance, and cofounder Changpeng Zhao requested the case to be permanently dismissed.
Notably, the dismissal will be "with prejudice," meaning the SEC cannot refile the lawsuit against Binance [1][3][4]. The decision was influenced by the SEC's internal reviews and policy discretion [3].
The joint motion terminates the SEC's lawsuit initially filed in June 2023, which accused Binance, BAM Trading, and Zhao of violating securities laws, mishandling customer funds, and misleading investors [3]. The SEC's request for the case's permanent dismissal indicates a definitive closure on any potential future attempts to litigate.
The SEC's Crypto Task Force reportedly played a part in the reevaluation of the case, suggesting that internal reviews could contribute to broader resolutions. The SEC acknowledged that the dismissal was appropriate "in the exercise of its discretion and as a policy matter" [3].
Binance hailed the dismissal as a substantial victory for the cryptocurrency industry and expressed gratitude to former President Donald Trump and new SEC Chair Paul Atkins for their pushback against what they termed "regulation by enforcement" [1][3].
The binance case follows a sequence of withdrawn or settled crypto-related actions previously filed under the Biden administration by the SEC, including Coinbase, Kraken, and ConsenSys, and ongoing investigations into Circle, Immutable, and OpenSea. The agency is currently working on a unified framework for crypto and securities [5].
It is essential to note that Binance had already addressed separate legal concerns with the Department of Justice (DOJ) in November 2023, with a $4.3 billion settlement and admissions of financial sanctions violations, unlicensed operations, and insufficient Anti-Money Laundering protocols [2][4]. The SEC's decision to drop the lawsuit could reflect a strategic alignment with other regulatory outcomes, potentially suggesting a more lenient stance on cryptocurrency regulation under the new leadership.
- The dismissal of the SEC's lawsuit against Binance, combined with the agency's ongoing withdrawals and settlements in the cryptocurrency industry, indicates a shift in focus towards a more lenient stance on cryptocurrency regulation, particularly in the realm of business, technology, and finance.
- The decision by the SEC to permanently dismiss its case against Binance signifies a significant development in the broader industry, potentially influencing future business practices within the intersection of technology and finance, as well as the regulatory approach towards digital assets.
