The SEC has stepped back from Binance and cited the Zhao case, discretion, new crypto strategy

The Securities and Exchange Commission (SEC) calls for the dismissal of high-profile lawsuits against global crypto exchange vinance and its co-founder Changpeng “CZ” Zhao, indicating a potentially significant shift in the agency’s crypto enforcement era.

A joint motion filed formal lawsuits on May 29th, along with Washington, D.C., federal court, SEC, SEC and Zhao, that would be officially released in June 2023 and end “on bias,” a legal provision that prevents the same lawsuit from being rehearsed, as it was officially released in June 2023.

SEC action background

The SEC lawsuit originally condemned Binance, its US ARM BAM deal, and Zhao for violating multiple securities laws. These allegations included misuse of client assets and provided misleading information to investors.

Related: FTX sues Binance and CZ for $1.8 billion. Alameda Research is targeting Waves founders

This notable progression of the case has reportedly resulted in the SEC’s recently established Cryptody Task Force reevaluating its ongoing enforcement strategy, earlier this year in February and again in April.

Task Force development affects termination

A recent court filing said development within the cryptographic task force “may affect and facilitate the potential resolution of this case.” The SEC further elaborated that the decision to dismiss the complaint was made “as an exercise and policy issue of its discretion” and demonstrates a deliberate choice rather than a defeat to merit.

This move to end civil lawsuits differs from previous legal resolutions by Binance and Zhao in November 2023. In another example, the exchange and its former CEO pleaded guilty to US criminal and civil charges related to money laundering and sanctions violations, with the Landmark having a $4.3 billion penalty. However, the comprehensive settlement did not cover the SEC civil claims.

A reflection of the evolving regulatory vibe?

The SEC’s decision to withdraw the lawsuit against Binance and Zhao appears in what appears to be a broader readjustment of regulatory policies on the digital asset sector, reportedly affected by the current Trump administration. Observers should note that since President Trump took office there has been an identifiable rollback or reevaluation of some well-known enforcement actions launched under previous Biden-era leadership.

Under former SEC chairman Gary Gensler appointed by President Biden, the agency pursued aggressive legal action against numerous digital asset platforms between 2021 and 2024, pursuing major exchanges such as Binance, Coinbase and Kraken, and during this period, it provided key allegations among digital wings at the intersection of the SEC.

Related: Faced with CZ Binance over money laundering claims in Seattle Court

In contrast, the current administration signalles a different attitude, working with President Trump’s publicly expressed support for the digital asset industry. As a result, the SEC appears to have moved towards a more cautious enforcement approach, leading to a decrease in the number of aggressive investigations and litigation cases of crypto companies.