Trump-era SEC drops Binance lawsuit: Is it a landmark shift in Crypto regulation?

In a stunning move that signals a major policy shift under President Donald Trump’s second administration, the US Securities and Exchange Commission (SEC) has officially dropped its civil enforcement case against Binance, the world’s largest cryptocurrency exchange.

The decision was made public in a joint court filing submitted on May 29 in a Washington, DC, federal court, as per Reuters.

What did SEC say

According to Reuters, the SEC said its decision to dismiss the case was based on policy considerations and not a reflection of its stance on cryptocurrency regulation at large. The lawsuit has been dismissed with prejudice, meaning the SEC is legally barred from reopening this specific case in the future.

A Binance spokesperson hailed the move as a “landmark moment,” expressing gratitude to SEC Chairman Paul Atkins and the Trump administration. “Innovation can’t thrive under regulation by enforcement,” the spokesperson said, as quoted by Reuters.

Background of the Lawsuit

According to Reuters, the SEC had initially sued Binance and its founder Changpeng Zhao (commonly known as CZ) in June 2023. The agency reportedly accused the crypto giant of inflating trading volumes, diverting customer funds, and misleading investors about its internal compliance mechanisms. The SEC also alleged that Binance facilitated the trading of multiple tokens that, under President Joe Biden’s administration, were considered unregistered securities.

This civil case was entirely separate from Binance’s high-profile criminal settlement in November 2023, in which the exchange pleaded guilty to violating US anti-money laundering and sanctions laws. Binance agreed to pay a record $4.32 billion penalty. Zhao himself served a four-month prison term for anti-money laundering violations and was released in September 2024, as per Reuters.

Not just Binance, SEC also dropped Coinbase case

According to Reuters, this isn’t the first crypto enforcement rollback under Trump’s new term. In February 2025, the SEC also dropped a similar case against Coinbase, the largest cryptocurrency exchange in the US, which was accused of listing at least 13 unregistered tokens.

Both dismissals reportedly reflect a broader recalibration of regulatory posture under Chairman Paul Atkins.

Atkins’ vision: Clarity over crackdowns

In a speech earlier this month, Atkins emphasized the need for a consistent and transparent regulatory framework. According to Reuters, he stated that one of his top priorities is to create “clear rules of the road” for issuing, trading, and securing digital assets—rules that support innovation while deterring bad actors.

For years, the crypto industry has criticized the SEC’s practice of regulating by enforcement rather than issuing clear guidelines. Industry leaders argue that most crypto tokens function more like commodities than securities, a classification that would remove the SEC from the regulatory equation altogether.

What this means for the future of Crypto in the US

The SEC’s decision to withdraw its lawsuit against Binance could be a harbinger of major changes in how digital assets are governed in the US.

With both Binance and Coinbase off the legal hook for now, crypto companies may find themselves operating in a more favorable regulatory environment—at least during the current administration.

However, the SEC has not ruled out future enforcement in other cases, making it clear that this dismissal should not be interpreted as a blanket approval of the crypto industry’s past conduct.

The road ahead

While this legal victory offers breathing room for Binance and the broader crypto sector, it also raises important questions about the future of investor protections, market transparency, and the regulatory role of federal agencies in the evolving digital economy.

As regulatory agencies rethink their approach, one thing is clear: the Trump administration is ushering in a new era for crypto, one that may prioritize innovation over enforcement.