Latest Update: SEC Dismisses Lawsuit Against Binance Cryptocurrency Exchange

securities laws to digital assets, with many companies likening tokens to commodities.

Classifying tokens as securities would require cryptocurrency companies to register with the SEC and disclose more to investors.

Atkins said on May 12 that developing a regulatory framework that establishes “clear rules of the road” for issuing, trading, and safekeeping crypto assets, while discouraging lawbreakers, would be a key priority.

On May 20, the SEC sued Unicoin, accusing the startup and executives of fraudulently raising more than $100 million to launch tokens they claimed were safe and backed by real estate and equity in companies that had yet to go public.

Trump promised during his 2024 White House run to be a “crypto president,” and pledged to reverse an industry crackdown overseen by Atkins’ predecessor Gary Gensler. The SEC has since withdrawn or put on hold many cryptocurrency enforcement cases.

Overall, the U.S. Securities and Exchange Commission (SEC) has made the decision to drop its lawsuit against Binance, the world’s largest cryptocurrency exchange. This voluntary dismissal comes as part of the regulator’s new approach to cryptocurrencies following the return of President Donald Trump to the White House. The dismissal was formalized through a joint stipulation of dismissal signed by lawyers for the SEC, Binance, and Binance founder Changpeng Zhao, filed in the Washington, D.C., federal court.

The SEC has clarified that the decision to dismiss the enforcement case was made based on its discretion and as a policy matter, emphasizing that it does not influence its stance on other cryptocurrency-related litigation. Moreover, the dismissal is with prejudice, meaning that the SEC cannot pursue this case in the future. In response to the dismissal, a Binance spokesperson expressed gratitude to SEC Chairman Paul Atkins and the Trump administration for recognizing the importance of fostering innovation without overly restrictive regulation.

The SEC initially brought the lawsuit against Binance and Zhao in June 2023, alleging various misconduct, including inflating trading volumes, mishandling customer funds, and providing misleading information to investors about its surveillance practices. Binance was further accused of facilitating the trading of multiple cryptocurrency tokens that the SEC believed should have been registered as securities according to the leadership during President Joe Biden’s administration.

It is noteworthy that this case against Binance was distinct from a prior legal matter in November 2023, where Binance pleaded guilty and incurred a substantial criminal penalty for violating anti-money laundering and sanctions laws due to internal control failures. Zhao, the Binance founder, also pleaded guilty to anti-money laundering violations, serving a four-month prison sentence, and being released in the preceding September.

In a separate enforcement action, the SEC dismissed a case against Coinbase, the largest U.S. cryptocurrency exchange, which involved allegations of trading in unregistered tokens. The cryptocurrency industry has expressed longstanding concerns regarding the application of federal securities laws to digital assets, arguing that many tokens should be classified as commodities instead.

SEC Chairman Atkins highlighted the importance of establishing a clear regulatory framework governing the issuance, trading, and security of crypto assets while simultaneously deterring illicit activities within the sector. Furthermore, recent legal actions, such as the lawsuit against Unicoin for fraudulent fundraising practices, underscore the ongoing efforts to uphold transparency and integrity within the cryptocurrency space.

Former President Trump, in his 2024 presidential campaign, positioned himself as a “crypto president” and vowed to counteract previous regulatory strictness under Atkins’ predecessor, Gary Gensler. Subsequently, the SEC has retracted or deferred numerous cryptocurrency enforcement cases as part of this policy shift towards a more favorable environment for the crypto industry.