US SEC Dismisses Lawsuit Against Binance and Founder Changpeng Zhao

The U.S. Securities and Exchange Commission (SEC) voluntarily dismissed its lawsuit against cryptocurrency exchange Binance and its founder and former CEO, Changpeng Zhao, last Thursday, May 29, 2025. The dismissal was made with prejudice, meaning the agency is barred from pursuing the case again.

The SEC had initially filed the lawsuit in June 2023, alleging that Binance and Zhao artificially inflated the exchange's trading volumes, diverted customer funds, and misled investors regarding the exchange's surveillance controls. The regulator also accused the exchange of facilitating the trading of cryptocurrencies that could be classified as unregistered securities.

The dismissal follows a period where the regulatory agency paused the case to assess the impact of a crypto task force. The official dismissal was finalized through a joint stipulation signed by lawyers representing the SEC, Binance, and Zhao, filed in the Washington D.C. federal court. According to the SEC, the decision to drop the enforcement case was deemed appropriate "in the exercise of its discretion and as a policy matter." However, the agency clarified that this action does not indicate a change in its position on other cryptocurrency-related litigation.

A spokesperson for Binance characterized the dismissal as "a landmark moment," adding, "We're deeply grateful to [SEC] Chairman Paul Atkins and the Trump administration for recognising that innovation can't thrive under regulation by enforcement."

Prior to this lawsuit, Binance and its founder faced criminal charges for lapses in anti-money laundering compliance and sanctions violations. Binance paid over $4.3 billion to settle charges brought by the U.S. Department of Justice and an additional $2.85 billion to settle with the Commodity Futures Trading Commission (CFTC). Zhao pleaded guilty to one of the money laundering charges and served four months in prison. He also stepped down as Binance CEO but retains his position as the exchange's majority shareholder. Despite these substantial settlements, the SEC had continued to pursue its civil case against the exchange until this recent dismissal. The agency's decision to drop the lawsuit was not unexpected, given its reported shift towards a more crypto-friendly stance under the current administration, alongside the dismissal of several other high-profile crypto lawsuits, including those against Ripple and Coinbase, and some ongoing investigations.