SEC Withdraws Legal Action Against Binance and Founder Changpeng Zhao

The Securities and Exchange Commission has officially dropped its lawsuit filed two years ago against Binance, one of the world’s leading cryptocurrency exchanges, and its founder, Changpeng Zhao. This move signals a continued retreat in cryptocurrency enforcement by the previous U.S. administration.

Previously, the SEC had accused Binance and Zhao of deceiving regulators regarding their operations within the United States and mismanaging customer funds.

Over recent months, the SEC has sought to dismiss numerous lawsuits and investigations targeting cryptocurrency firms. In February, the agency requested a pause in the litigation against Binance to reconsider its regulatory strategy toward the rapidly evolving crypto market.

In its four-page dismissal notice, the SEC stated it was ending the litigation “in the exercise of its discretion and as a policy matter.”

This dismissal marks a pivotal moment in the SEC’s rollback of cryptocurrency regulations, especially given Zhao’s influential status in the industry as a multibillionaire entrepreneur.

Zhao, a Canadian citizen born in China and often referred to as C.Z., pleaded guilty in November 2023 to federal money laundering charges. He served four months in federal prison but retained the majority of his financial holdings.

Recently, World Liberty Financial, a cryptocurrency company founded by the family of former President Donald Trump, announced its role in facilitating a $2 billion transaction between Binance and MGX, a fund backed by Abu Dhabi. Executives from World Liberty Financial also held meetings with Zhao.

Former President Trump, who previously criticized the cryptocurrency industry, shifted his position during his last presidential campaign by pledging to support the sector’s growth and reduce the SEC’s regulatory efforts.

The Trump family has increasingly become financial supporters of the crypto market. In addition to World Liberty Financial, they are backing a memecoin launched shortly before Trump’s January inauguration.

Last week, Trump hosted a dinner at his Virginia golf club attended by top investors in his personal cryptocurrency, $TRUMP. The event helped boost sales of the memecoin, which has attracted investment from both domestic and international buyers, effectively channeling funds to the Trump family.

American Bitcoin, a crypto company co-founded by Eric Trump, one of the former president’s sons, announced plans this month to pursue a public offering.

Additionally, Trump Media & Technology Group, the social media company owned by Trump, revealed it had secured $2.5 billion from investors to acquire Bitcoin as part of its investment strategy. This company operates Truth Social and is currently unprofitable.

Donald Trump holds the largest share in Trump Media, valued at over $2 billion, with his shares managed by a trust overseen by his eldest son, Donald Jr., who also sits on the company’s board.

Observers have raised concerns about potential conflicts of interest arising from the Trump family’s deepening involvement in cryptocurrency amid the SEC’s easing of regulatory oversight on digital assets.