In a landmark development for the cryptocurrency industry, the U.S. Securities and Exchange Commission (SEC) has officially dropped its lawsuit against Binance and its founder, Changpeng Zhao (CZ). This move effectively closes one of the last major regulatory actions stemming from the agency’s previous aggressive enforcement stance on digital assets. The dismissal, granted with prejudice, ensures that the same claims cannot be refiled, marking a significant turning point in the evolving relationship between U.S. regulators and the crypto sector.

A Symbolic End to a Major Crackdown

The original lawsuit, filed in June 2023, accused Binance of multiple serious violations, including:

• Illegally serving U.S. users

• Inflating trading volumes

• Commingling customer funds

• Facilitating trading of unregistered securities

These allegations formed the core of the SEC’s broader offensive against the crypto industry, which also targeted companies like Coinbase and Kraken. The Binance case, in particular, was seen as a cornerstone of the SEC’s mission to bring clarity to what it considered a largely unregulated market.

However, the agency’s joint motion with Binance to dismiss the case, filed in the U.S. District Court for the District of Columbia, signals not just the end of this particular litigation, but potentially a wider change in regulatory posture.

Changing of the Guard at the SEC

The decision to dismiss comes amid broader shifts within the U.S. government’s approach to crypto. Under new leadership, the SEC is increasingly moving away from enforcement-first tactics toward rule-based engagement and regulatory rollback. Commissioner Hester Peirce, often seen as a crypto-friendly voice within the SEC, highlighted the lack of clear regulatory frameworks in her recent comments:

“We didn’t have a clear set of rules… What we’re trying to do is take a step back, use our regulatory tools to write those rules, and then enforce them,” she told CNBC.

This pivot is echoed in the agency’s policy reversals. Notably, the SEC recently repealed Staff Accounting Bulletin 121 (SAB 121), a contentious rule that treated crypto holdings as liabilities on bank balance sheets. The rollback was seen as a significant victory by industry participants, who viewed the rule as a deterrent to institutional adoption.

Political and International Implications

The lawsuit’s dismissal also comes in the context of changing political tides. The Trump administration, which has returned to power, is actively positioning itself as a pro-crypto ally. Recent developments illustrate this alignment:

• The Justice Department shut down its crypto enforcement team

• The Commodity Futures Trading Commission (CFTC) is now led by a venture capitalist with ties to crypto

• SEC roundtables, spearheaded by Chair Paul Atkins and Hester Peirce, are focusing on constructive engagement rather than punitive action

Binance’s political and financial alliances further reflect this shift. The company has formed ties with World Liberty Financial (WLF), a crypto banking initiative that funnels 75% of its profits to Trump-affiliated entities. Binance is also receiving a $2 billion investment from MGX, an Emirati state-backed fund, entirely in USD1, a new stablecoin issued by WLF.

Internationally, Binance and WLF are expanding in Pakistan, where WLF co-founder Zack Witkoff—son of U.S. Middle East envoy Steve Witkoff—has inked a deal with the government. CZ himself has been appointed as an adviser to Pakistan’s Crypto Council, a state-backed initiative to shape national crypto policy.

Engagement Over Enforcement

Despite the drop in enforcement actions, Commissioner Peirce made it clear that the shift does not give scammers a free pass:

“It is not time for people to think, ‘I have a free pass to go rip people off in the name of crypto.’ That is not the case.”

Nonetheless, the broader tone has clearly changed. In February, the SEC issued new guidance indicating that it no longer considers most meme coins to be securities under federal law, a move that has benefited ventures tied to the Trump family, such as the $TRUMP token, which currently boasts a market cap of approximately $2.4 billion.

These changes signal a new era in crypto regulation — one that prioritises clarity, collaboration, and perhaps most importantly, political alignment.