The Trump administration’s retreat on crypto enforcement continued Thursday as the Securities and Exchange Commission announced that it was dismissing a lawsuit it filed two years ago against the giant cryptocurrency exchange Binance and its founder, Changpeng Zhao.
The SEC had accused Binance and Zhao of lying to regulators about its operations in the United States and mishandling customer money.
The commission, the nation’s top securities regulator, has moved to dismiss more than a dozen lawsuits or investigations against crypto firms. In February, it asked a federal judge to stay the litigation against Binance as it reassessed its approach to regulating the fast-growing crypto industry.
In the four-page dismissal notice, the regulator said it was dropping the litigation “in the exercise of its discretion and as a policy matter.”
The dismissal is a signature moment for the SEC’s regulatory rollback given the prominence of Zhao, a multibillionaire, in the crypto industry.
Zhao, a Chinese-born Canadian who is also known as CZ, pleaded guilty in November 2023 to violating federal money-laundering charges. But he spent just four months in federal prison and emerged with most of his financial empire untouched.
This month, World Liberty Financial, a crypto firm started by President Donald Trump’s family, announced that it was helping to facilitate a $2 billion business deal between Binance and MGX, an Abu Dubai-backed fund. Executives for World Liberty Financial also met with Zhao.
Trump, once a critic of the crypto industry, reversed his stance during last year’s presidential campaign and vowed to let the industry flourish and roll back much of the SEC’s regulatory enforcement agenda.
Trump and his family also have become major financial boosters of the crypto industry. Besides World Liberty Financial, they are backing a so-called meme coin that was introduced just days before Trump’s inauguration in January.
Last week, the president hosted a dinner at his Virginia golf club, and among the guests were the highest-paying customers of his personal cryptocurrency, known as $TRUMP. The event helped promote sales of the meme coin, which has become a vehicle for investors, including many foreigners, to funnel money to his family.
American Bitcoin, a crypto firm co-founded by Eric Trump, one of the president’s sons, said this month that it planned to go public.
And this week, Trump’s social media company, Trump Media & Technology Group, said it had raised $2.5 billion from investors to buy up bitcoin, essentially as an investment strategy. Trump Media, a money-losing venture, is the parent company of Truth Social.
Trump is the company’s largest shareholder, with a stake worth more than $2 billion. His shares are held in a trust managed by his eldest son, Donald Jr., who is a board member.
Critics have said the Trump family’s involvement with crypto poses a potential conflict of interest given the SEC’s moves easing the regulation of digital assets.
