SEC Requests Dismissal of Binance Lawsuit Following Two-Year Securities Battle

The US Securities and Exchange Commission (SEC) filed a request with a federal judge on May 29 to dismiss the civil case against Binance and its CEO, Changpeng ‘CZ’ Zhao, as outlined in a four-page document submitted to the District Court.

In February, Judge Amy Berman Jackson imposed a 60-day pause on the proceedings after both parties informed the court that a newly formed SEC crypto task force, led by Commissioner Hester Peirce, might significantly influence the resolution of the litigation.

This pause halted the discovery deadlines while the task force examined whether current securities regulations applied to platforms dealing in digital assets.

Meanwhile, Binance has been adhering to the terms of a prior consent order that required increased transparency regarding custodial practices and the segregation of assets belonging to US customers.

In a statement on X, Binance described the dismissal as a significant victory for the cryptocurrency sector, expressing gratitude to various individuals for advocating against regulation through enforcement.

The documentation submitted indicates that the Commission “hereby dismisses” all claims against each defendant involved in the case.

There was no mention of a financial settlement in the notice, and it did not clarify if the dismissal was with or without prejudice.

Since no counterclaims have been made by the defendants, the SEC has the option to abandon the lawsuit unilaterally in accordance with Federal Rule 41(a)(1)(A)(i). Once the clerk processes the notice, Judge Jackson’s endorsement is anticipated to officially conclude the case.

As the SEC wraps up this matter, Binance.US continues to be under the oversight of the consent decree, which requires regular compliance updates and independent audits of its custodial wallets. For any future enforcement actions, a new complaint will need to be initiated.

The court is expected to finalize the case upon receipt of the dismissal notice, bringing closure to the two-year legal dispute involving the SEC and Binance Holdings Ltd., BAM Trading Services Inc., and Changpeng Zhao.

The SEC initiated the original action in June 2023. Investigators contended that Binance and Binance.US were operating as unregistered securities exchanges, broker-dealers, and clearing agencies.

The allegations claimed that the platform manipulated trading volumes through wash trades, funneled customer funds to market-making firms owned by Zhao, and misled investors regarding the effectiveness of its surveillance systems against manipulation.

The SEC sought injunctive relief, return of profits obtained, and civil fines.

Binance denied any violations, asserting that its digital asset offerings do not qualify as securities according to the Howey test and that its international operations are beyond the SEC’s scope.

Simultaneous criminal investigations by the US Department of Justice resulted in Binance pleading guilty in November 2024 to violations of the Bank Secrecy Act and consenting to a $4.3 billion settlement.

Additionally, Zhao was sentenced to four months in prison, which he served and completed by September 2024.