The U.S. Securities and Exchange Commission (SEC) has officially dropped its lawsuit against Binance, the world’s largest crypto exchange, and its founder, Changpeng Zhao. This decision, finalized in a Washington D.C. federal court on May 29, 2025, marks the end of one of the most high-profile regulatory battles in the digital asset space and signals a potential shift in the U.S. government’s approach to crypto oversight.

Image Source: Binance

A Two-Year Legal Battle

The SEC first filed its lawsuit in June 2023, accusing Binance and Zhao of a litany of violations: mishandling customer funds, misleading investors and regulators, artificially inflating trading volumes, and offering unregistered securities to U.S. investors. The case quickly became a symbol of the broader crackdown on crypto exchanges, with Binance facing additional scrutiny from the Department of Justice and the Commodity Futures Trading Commission (CFTC). In late 2023, Binance and Zhao pleaded guilty to separate criminal charges, resulting in a $4.3 billion settlement and Zhao stepping down as CEO after serving a four-month prison sentence.

Why Did the SEC Drop the Case?

The agency’s decision to dismiss the lawsuit “with prejudice”, meaning it cannot be refiled, was explained as a matter of policy and discretion. In its court filing, the SEC stated that the dismissal “does not necessarily reflect its position in any other litigation or proceeding,” suggesting that while the Binance case is closed, the agency’s stance on other crypto-related matters remains unchanged.

Behind the scenes, the regulatory climate in Washington has shifted dramatically. With President Donald Trump’s return to office and the appointment of Paul Atkins as SEC Chair, the agency has begun to move away from what critics called “regulation by enforcement.” Instead, a new crypto task force was established to develop a clearer regulatory framework for digital assets, prompting the SEC to pause and now dismiss several high-profile lawsuits, including those against Ripple and Coinbase.

Industry Reaction

The crypto community has widely celebrated the dismissal. Binance called it a “huge win for crypto,” thanking the SEC’s new leadership and the Trump administration for “pushing back against regulation by enforcement.” In a statement, Binance.US declared, “This outcome confirms what we have always known: that we did not violate U.S. securities laws.” The company emphasized that the resolution allows it to focus on rebuilding its business and restoring relationships impacted by the long-running legal battle.

What’s Next?

With the lawsuit behind it, Binance is poised to refocus on growth and compliance. The exchange remains under the watchful eye of global regulators, but the U.S. case’s closure removes a significant cloud of uncertainty. For the broader industry, the SEC’s retreat is seen as a sign that the U.S. may finally be moving toward more predictable and innovation-friendly crypto regulation.

However, the SEC was careful to note that this decision is not a blanket endorsement of all crypto practices. Commissioner Hester Peirce recently reminded investors that speculative digital assets still carry risk and that government protection should not be expected in every case.

A Turning Point for Digital Assets

The SEC’s dismissal of its lawsuit against Binance is more than just the end of a legal dispute, it’s a turning point in the regulatory narrative surrounding cryptocurrencies in the United States. As the industry awaits the release of a formal regulatory framework, optimism is high that a new era of clarity and collaboration between regulators and innovators may be on the horizon.