SEC drops charges against Binance and Zhao, closing major crypto case
The US Securities and Exchange Commission has officially closed its case against Binance and its founder, Changpeng Zhao, ending one of the last major legal battles between the agency and the cryptocurrency exchange.
In a court filing on Thursday, both the SEC and Binance asked a federal judge in Washington, D.C. to dismiss the lawsuit, which was first filed in June 2023. The judge agreed, marking a final stop to a case that had accused Binance of misleading regulators and investors about how it handled US users and their money.
According to the SEC, Binance and Zhao said publicly that US users weren’t allowed to trade on the global Binance.com site. But the agency claimed they quietly let high-value US customers keep trading there. The SEC also said Binance.US was supposed to be a separate platform for American users, but Zhao and his team were still calling the shots behind the scenes.
The SEC alleged that Zhao and Binance controlled customer assets in both platforms and moved them around as they saw fit. Some of those funds, regulators said, were sent to Sigma Chain, a trading firm owned by Zhao. The agency also accused BAM Trading and BAM Management – companies behind Binance. US – of misleading investors by claiming there were strong trading controls in place, while Sigma Chain allegedly manipulated the platform’s trading volume to make it seem more active than it really was. The complaint said Binance was mixing customer funds and moving billions of dollars to Merit Peak, another firm connected to Zhao.
The case had been one of the most aggressive actions by US regulators against a cryptocurrency firm. Its dismissal signals a shift in how the US government is approaching the industry. The Justice Department has already shut down its cryptocurrency crime unit, and the Commodity Futures Trading Commission is expected to be led by a venture capitalist with ties to the sector.
Binance remains the largest cryptocurrency exchange by trading volume. It’s currently working with World Liberty Financial, a company that wants to act as a cryptocurrency bank and directly profits groups linked to the Trump family. Binance is also taking a $2 billion investment – paid entirely in USD1, a new stablecoin – from MGX, a state fund based in the United Arab Emirates.
Both Binance and World Liberty are also expanding in Pakistan. WLF co-founder Zack Witkoff, the son of a US diplomat, recently reached an agreement with the Pakistani government. Around the same time, Zhao was named as an adviser to the country’s new Cryptocurrency Council, which is tasked with helping shape digital asset policy.
The SEC was the last US regulator still investigating Binance following a $4.3 billion settlement last year. As part of that deal, Zhao pleaded guilty and stepped down as CEO, but avoided jail and kept much of his personal fortune.
The dismissal of the SEC case was made “with prejudice,” meaning it can’t be reopened.
(Photo by Kanchanara)
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