SEC Asks Court to Dismiss Lawsuit Against Crypto Exchange Binance “with Prejudice”

Ryan J. Farrick — May 30, 2025

Seal of the US SEC with gavel in front of it; image by sergeitokmakov, via Pixabay.com.

The SEC did not provide a detailed explanation for its about-face, but indicated that the Trump administration made a calculated decision to cease litigation.

The Trump administration announced on Thursday that it has decided to drop a lawsuit filed two years ago against cryptocurrency exchange Binance and its founder, Changpeng Zhao.

The initial Securities and Exchange Commission lawsuit alleged that Binance and its founder misrepresented its operations in the United States and lost or otherwise mismanaged large amounts of consumer money.

However, since taking office in January, President Donald Trump and his associates have directed the SEC to dismiss more than a dozen pending lawsuits and investigations into cryptocurrency companies. As early as February, the Trump administration asked a federal judge to halt the SEC’s complaint against Binance, saying that it was planning to reconsider its approach to cryptocurrency regulations.

U.S. Secretary of State Anthony Blinken in 2024. Under the Biden administration, the SEC filed lawsuits against multiple cryptocurrency exchanges alleged to be engaging in deceptive practices. Image via Flickr/user:GPA Photo Archive. Public domain. (source:https://www.flickr.com/photos/iip-photo-archive/51024344951).

In court filings, the SEC said that “Defendants have enriched themselves by billions of U.S. dollars while placing investors’ assets at significant risk.” It further claims that Zhao and Binance “defrauded equity, retail, and institutional investors about purported surveillance and controls over manipulative trading on the Binance.US Platform, which were in fact virtually nonexistent.”

“Defendants failed to satisfy basic requirements of registered exchanges—to have rules designed to prevent fraudulent and manipulative acts and the capacity to carry out that purpose,” the lawsuit alleged. The SEC provided an example of this purported negligence, saying that Binance never made a good-faith to control “wash trading,” a strategy used to inflate the price of cryptocurrencies and other digital assets.

In spite of these strong allegations, the SEC on Thursday filed a notice stating that “the Parties stipulate that this Litigation be dismissed with prejudice … and without costs or fees to any party.”

Since the dismissal is “with prejudice,” the SEC cannot sue Binance in relation to the same allegations at any point in the future.

The SEC did not provide a detailed explanation for its about-face, but indicated that the Trump administration made a calculated decision to cease litigation.

“In light of [the litigation process], and in the exercise of its discretion as a policy matter, the Commission believes the dismissal of this Litigation is appropriate,” the notice said.

The SEC has, since January, dropped multiple lawsuits against other cryptocurrency exchanges, including a claim against Coinbase, the largest exchange in the United States.