In June 2023, the Securities and Exchange Commission (SEC) filed charges against the crypto asset trading platform for multiple violations of securities laws.
This week, a litigation release announced that the SEC has reached a joint stipulation with Binance entities and founder Changpeng Zhao to dismiss the ongoing civil enforcement action with prejudice. The release states: "In the exercise of its discretion and as a policy matter, the Commission determined that the dismissal of this action is appropriate. Furthermore, as noted in the joint stipulation, ‘the Commission’s decision to seek dismissal of this Litigation does not necessarily reflect the Commission’s position on any other litigation or proceeding.’"
Celebrating the outcome on X, Binance declared, "Huge win for crypto today. The SEC’s case against us is dismissed. Thank you to Chairman Atkins & the Trump team for pushing back against regulation by enforcement. U.S. innovation is back on track – and it’s just the beginning."
This sentiment was further elaborated in a blog post that described the dismissal as "a major win for our customers, our business, and the digital asset industry." The blog asserted, "From the outset, we maintained that the SEC’s claims were baseless, unjustified, and politically motivated. Rather than offering regulatory clarity to ensure safe access to digital assets, the SEC opted for a campaign of regulation by enforcement, ultimately harming American consumers and businesses."
The post highlighted the repercussions of aggressive actions by a regulatory body like the SEC, stressing, "This overreach has taken a significant toll on our business, forcing us to divert resources to defend against unwarranted claims. However, with today’s victory and new leadership at the SEC, a meaningful shift is underway."
In March 2023, the US Commodity Futures and Trading Commission (CFTC) charged Binance and two executives with "willful evasion of US law," seeking significant penalties and permanent trading bans. Then, in June, Binance’s attempt to secure a virtual asset service provider (VASP) license in the Netherlands failed, resulting in the exit from that market. Around the same time, French prosecutors began investigating Binance over concerns of "aggravated money laundering" related to investment operations.
The SEC’s allegations included claims of an "extensive web of deception." In October, after the UK’s FCA implemented new rules requiring firms promoting crypto assets to be authorized, Binance initially collaborated with Rebuildingsociety.com for financial promotion approvals. However, it soon became clear that the company lacked the requisite licensing.
In November, Binance agreed to pay $4.3 billion in penalties and forfeitures to conclude a lengthy investigation by the US Department of Justice and other federal agencies. Founder Changpeng Zhao pleaded guilty to anti-money laundering violations and stepped down as CEO, with Richard Teng, Binance’s head of regional markets, taking over.
"I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself," Zhao stated on X during this transition. In addition to the Department of Justice lawsuit, Binance also settled the charges with the CFTC.