The U.S. Securities and Exchange Commission (SEC) is seeking to pause its high-profile lawsuit against the cryptocurrency exchange Binance as it attempts to present itself as more crypto-friendly under the new administration.
On Monday, Binance and the SEC jointly filed a motion requesting a 60-day stay in the lawsuit, which the regulator originally filed with significant publicity two years ago under the leadership of former Chairman Gary Gensler.
According to the filing submitted to the U.S. District Court for the District of Columbia, the SEC approached Binance to request the pause.
The regulator stated that the work of a newly launched crypto task force, introduced by Acting Chairman Mark Uyeda, aims to strengthen ties with the crypto industry and “may impact and facilitate the potential resolution of this case.”
Carol Goforth, a distinguished professor at the University of Arkansas School of Law, described the filing as the first “tangible action in existing enforcement actions that recognizes a change in direction of the agency.”
Binance, the world’s largest cryptocurrency exchange—a digital marketplace where customers can buy, sell, and store various types of cryptocurrencies—drew significant attention when the SEC’s lawsuit was first filed.
At the time, Gensler issued a statement accusing Binance and its founder, Changpeng Zhao, of orchestrating an extensive “web of deception.”
The SEC’s official X account also posted a graphic highlighting a key piece of alleged evidence: a quote from Binance’s chief compliance officer telling another employee in 2018, “We are operating as a fking unlicensed securities exchange in the USA bro.”
In a separate case, Binance later agreed to pay a settlement of approximately $4 billion, and Zhao pleaded guilty to a felony related to his failure to prevent money laundering on the platform.
A major issue for the cryptocurrency industry has been the debate over whether certain digital assets should be classified as securities. The SEC under Gensler took the position that they should be, while many in the crypto industry strongly opposed this view.
Cryptocurrencies, a form of electronic cash, have experienced rapid growth from the financial fringes to the mainstream, despite being plagued by scandals and market collapses.
The SEC has pursued legal action against crypto exchanges like Binance and Coinbase, accusing them of operating unregistered securities exchanges. This increased scrutiny followed the dramatic collapse of FTX, the crypto exchange founded by disgraced mogul Sam Bankman-Fried.
Many in the crypto industry have argued that they were unfairly targeted by the Biden administration and Gensler in particular.
As a result, they heavily funded efforts to support Trump and Republican candidates in the last election. Trump and GOP lawmakers have indicated their willingness to support the crypto industry with favorable legislation and more lenient regulations.
Last month, Uyeda announced the creation of the new crypto task force, emphasizing the need for a reset in the SEC’s approach to crypto regulation.
“To date, the SEC has relied primarily on enforcement actions to regulate crypto retroactively and reactively, often adopting novel and untested legal interpretations along the way,” the agency stated when announcing the task force. “Clarity regarding who must register, and practical solutions for those seeking to register, have been elusive.”
Legal experts believe the pause in the Binance case could signal similar shifts in the SEC’s ongoing legal battles with other crypto exchanges.
“I would expect that all of these cases will be either dismissed outright or settled on very favorable terms to the defendants,” said securities law expert James Murphy.
However, Corey Frayer, a former SEC official who recently left the agency, viewed the move as a concerning development.
“The SEC delaying what appears to be a slam dunk case in Binance while welcoming crypto’s return to its pre-FTX days is a bad omen for any other ongoing crypto litigation,” he said.
In a statement, Binance asserted that the SEC’s case “has always been without merit” and praised Uyeda for “his thoughtful approach to ensuring digital assets receive the appropriate legislative and regulatory focus in this new, golden era of blockchain in the U.S. and around the world.”
