SEC drops lawsuit against Binance in major crypto regulatory shift

The Securities and Exchange Commission (SEC) agreed to dismiss its high-profile lawsuit against Binance, ending a two-year legal battle that once threatened to cripple the world’s largest crypto exchange. The joint stipulation, filed May 29, 2025, abandons all charges against Binance Holdings, its US affiliate, and founder Changpeng Zhao (CZ), marking a watershed moment for cryptocurrency regulation.

The dismissal of the lawsuit against Binance comes just months after the SEC’s newly formed Crypto Task Force began reevaluating enforcement priorities under Chair Paul Atkins, who replaced the controversial Gary Gensler in late 2024.

“This outcome confirms what we’ve maintained since 2023: Binance operated within legal boundaries,” a Binance.US spokesperson tweeted hours after the court filing.

How the lawsuit against Binance unraveled

The lawsuit against Binance initially accused the exchange of 12 securities violations, including operating illegally in the U.S., inflating trading volumes, and misusing customer funds. But the case collapsed after federal judge Amy Berman Jackson paused proceedings in February 2025, citing the SEC’s “evolving posture on digital assets.”

Legal experts say the dismissal reflects broader regulatory retreat.

“The SEC overplayed its hand with the lawsuit against Binance,” said Jake Chervinsky, Chief Legal Officer at Variant Fund. “This isn’t just a settlement, it’s a surrender.” His analysis aligns with recent SEC dismissals of cases against Coinbase and Kraken.

Behind the scenes: Politics, pivots, and prison

The resolution of the lawsuit against Binance follows a turbulent period for the exchange:

• CZ served 4 months in prison for Bank Secrecy Act violations

• Binance paid a $4.3 billion DOJ fine in 2024

• The SEC’s new leadership scrapped Gensler’s “regulation by enforcement” model

Notably, the dismissal coincides with reports that Binance lobbied the Trump administration to revive its U.S. operations. While CZ denied allegations of seeking a presidential pardon, insiders claim the SEC’s reversal was “inevitable” after political winds shifted.

What the dismissal means for crypto’s future

With the lawsuit against Binance now closed, analysts predict:

1. Surge in altcoin trading as regulatory uncertainty fades

2. Accelerated approvals for spot Ethereum ETFs

3. Congress fast-tracking the Market Structure Bill

“Regulators finally recognize that crushing innovation helps no one,” said Hester Peirce, the SEC commissioner who spearheaded the Crypto Task Force. Her comments hint at a more collaborative approach: a contrast to the era that birthed the lawsuit against Binance.

As the dust settles, it’s becoming clearer that the lawsuit against Binance wasn’t just a legal case—it was a referendum on crypto’s survival. Its dismissal may well be remembered as the day the industry outlived its toughest opponent.