by AK Arora 
In June 2023, the US Securities and Exchange Commission filed one of the most consequential lawsuits in crypto history against the world’s largest cryptocurrency exchange.
Nearly two years later, in May 2025, that same lawsuit ended not with a dramatic verdict, but with both sides quietly filing a joint motion asking a federal court to dismiss the entire case — with prejudice, meaning the SEC could never bring the same charges again.
In between those two moments sat a $4.3 billion criminal settlement, a guilty plea from Binance’s billionaire founder, a brief prison sentence, and a complete change in US political leadership that fundamentally altered how American regulators approached the entire crypto industry. For a broader comparison of Binance against other major exchanges, read our CoinDCX vs Binance guide. This is the complete story.
How the Lawsuit Began
On June 5, 2023, the SEC filed a sweeping civil lawsuit against Binance, its founder Changpeng “CZ” Zhao, and its US affiliate, Binance.US.
The allegations were extensive. The SEC accused Binance of operating as an unregistered securities exchange, broker-dealer, and clearing agency simultaneously — essentially running an entire securities market infrastructure in the US without any of the regulatory registration that activity legally required.
Beyond the structural allegations, the SEC made specific, serious claims: that Binance had illegally served high-value US customers despite claiming to restrict American access, that the exchange had inflated trading volumes, and that it had commingled and diverted customer funds — including allegedly routing billions of dollars to a separate entity controlled by CZ personally.
The lawsuit also specifically targeted BNB, Binance’s native token, and its BNB Vault staking program, alleging both had been offered to investors as unregistered securities — a claim that, if it stuck, carried significant implications for how exchange-issued tokens, including governance tokens used in DAOs, are treated across the entire industry.
This civil case arrived alongside a separate, earlier action. The Commodity Futures Trading Commission (CFTC) had already sued Binance and CZ in March 2023, alleging the exchange offered unregistered crypto derivatives products to US customers — meaning Binance was facing two separate federal regulators simultaneously before the year was even half over.
The DOJ Settlement: A Separate, Faster Resolution
While the SEC’s civil case ground forward through 2023, a parallel and far more consequential legal track was moving much faster: a criminal investigation by the US Department of Justice.
In November 2023, Binance and CZ reached a sweeping settlement with the DOJ and several other federal agencies. The terms were severe:
Binance pleaded guilty to violating anti-money laundering laws, operating an unlicensed money transmitting business, and violating US sanctions — agreeing to pay over $4.3 billion in penalties, one of the largest corporate settlements in US history.
CZ personally pleaded guilty to violating the Bank Secrecy Act, a US anti-money laundering law. As part of the deal, he agreed to step down as Binance’s CEO and was personally fined $50 million.
In 2024, CZ was sentenced to four months in federal prison — a notably light sentence given the scale of the underlying violations, which drew criticism from some quarters as disproportionately lenient given that he retained much of his substantial personal wealth and avoided more severe penalties.
Crucially, this settlement resolved the criminal charges but did not touch the SEC’s separate civil case. The SEC’s lawsuit, focused specifically on securities law violations rather than anti-money laundering and sanctions issues, continued independently. For comparison with another major exchange collapse, read our FTX collapse explained guide.
The Civil Case Gains Momentum (2024)
Through late 2023 and into 2024, the SEC’s civil case proceeded with genuine legal substance, even as momentum occasionally slowed amid procedural disputes over discovery and jurisdiction.
In June 2024, a significant ruling arrived. A federal judge allowed the SEC’s central allegations to proceed to further litigation, rejecting Binance’s attempts to have the core claims dismissed early. The court specifically sustained the allegations that Binance had operated as an unregistered exchange, broker-dealer, and clearing agency, and — notably — upheld the claim that BNB and the BNB Vault program had been offered as unregistered securities.
This ruling mattered significantly beyond Binance specifically. It represented one of several federal court decisions during this period wrestling with the fundamental question that has defined crypto regulation in the US for years: when does a digital token cross the line into being a security under US law, triggering the SEC’s full regulatory jurisdiction?
Some analysts at the time noted that Binance’s own DOJ settlement and guilty pleas may have inadvertently strengthened the SEC’s civil case — the SEC explicitly argued the court should weigh CZ’s criminal admissions when evaluating the parallel civil allegations.
The Political Shift That Changed Everything
The case’s trajectory changed dramatically following the 2024 US presidential election and Donald Trump’s return to office in January 2025.
Trump had campaigned with explicit support from the crypto industry and adopted a markedly different regulatory posture than his predecessor. Almost immediately, the SEC’s approach to crypto enforcement shifted. Gary Gensler, the SEC chair under President Biden who had pursued an aggressive enforcement campaign against numerous crypto companies — including Binance, Coinbase, and Kraken — departed, replaced by new leadership more sympathetic to the industry’s regulatory concerns. Mark Uyeda served as acting chair before Paul Atkins was confirmed and sworn in as full SEC chair.
Under this new leadership, the SEC began systematically withdrawing enforcement actions across the crypto industry — dropping over a dozen investigations and lawsuits against various companies that had been initiated under Gensler. The Binance case, by this point already effectively paused while the SEC’s newly formed crypto task force worked on developing clearer regulatory frameworks, became one of the highest-profile cases on this withdrawal list.
The Dismissal: May 29, 2025
On May 29, 2025, the SEC and Binance jointly filed a motion in the US District Court for the District of Columbia to dismiss the entire case.
The motion was filed with prejudice — a legally significant detail meaning the SEC permanently forfeited any future ability to refile the same claims against Binance. The filing also included provisions specifically blocking Binance or its affiliated entities and executives from later filing any countersuit against the SEC related to the case.
No detailed explanation accompanied the filing. SEC Commissioner Hester Peirce, speaking publicly around the time of the dismissal, characterised the broader shift as reflecting a move toward clearer rulemaking after what she described as years of regulatory ambiguity: “We didn’t have a clear set of rules,” she noted, framing the wave of dismissals as an attempt to evaluate prior enforcement actions on a more careful “facts and circumstances basis” going forward, rather than continuing litigation initiated under a fundamentally different regulatory philosophy.
Binance declared the outcome a “landmark moment.” Binance.US stated publicly that the dismissal confirmed “what we have always known — that the company did not violate U.S. securities laws.”
The Full Timeline at a Glance
| Date | Event |
|---|---|
| March 2023 | CFTC sues Binance and CZ over unregistered derivatives |
| June 2023 | SEC files civil lawsuit alleging unregistered securities offerings |
| November 2023 | Binance/CZ settle with DOJ — $4.3B fine, CZ guilty plea, steps down as CEO |
| 2024 | CZ sentenced to 4 months in federal prison |
| June 2024 | Federal judge allows SEC’s core allegations to proceed, including BNB as security claim |
| January 2025 | Trump administration begins; SEC leadership changes |
| Early 2025 | SEC pauses case; crypto task force formed to develop new regulatory framework |
| May 29, 2025 | SEC and Binance jointly move to dismiss case with prejudice |
What the Dismissal Did and Did Not Resolve
It is worth being precise about what actually changed as a result of the dismissal — because it resolved less than headlines sometimes suggested.
What was resolved: The SEC permanently abandoned its specific civil securities claims against Binance, Binance.US, and CZ. The case cannot be refiled on the same grounds.
What was not resolved: The dismissal did not constitute a court ruling that Binance’s conduct was lawful — it was a voluntary withdrawal by the regulator, not a judgment on the merits after full trial. Binance’s earlier $4.3 billion criminal settlement and CZ’s guilty plea, admissions of anti-money laundering violations, and prison sentence all remain on the historical record entirely unaffected by the SEC’s later civil dismissal.
What remains genuinely unresolved industry-wide: The fundamental legal question the case partially addressed — whether and when crypto tokens like BNB constitute securities under US law — remains without a definitive, binding appellate resolution. The dismissal closed this specific case without producing the kind of clear, precedent-setting court ruling that could have provided lasting clarity for the broader industry.
Why This Case Mattered Beyond Binance
The Binance case’s journey — from aggressive 2023 lawsuit to 2025 dismissal — illustrates something significant about how US crypto regulation has actually evolved, separate from any specific company’s conduct.
It demonstrates how dramatically enforcement philosophy can shift with changes in regulatory leadership, even when the underlying facts and prior admissions of guilt remain unchanged. Binance’s DOJ settlement, guilty pleas, and CZ’s prison sentence are permanent historical facts. Yet the SEC’s parallel civil pursuit of additional securities violations was entirely abandoned under different leadership with a different enforcement philosophy — despite a federal court having already allowed the core allegations to proceed just a year earlier.
For investors and the broader industry, this case underscores how much US crypto regulatory outcomes have depended on enforcement discretion and political leadership, rather than settled, binding legal doctrine — a dynamic that continues shaping the regulatory environment as the industry awaits more comprehensive legislation. Read our timeline of crypto regulation worldwide guide for the broader regulatory context this case fits within.
FAQ
Did Binance win or lose the SEC lawsuit?
Neither side received a definitive court verdict. The SEC voluntarily moved to dismiss its own case in May 2025, with both parties jointly filing the motion. This ended the litigation without a trial ruling on the underlying securities law allegations, though it did permanently bar the SEC from refiling the same claims.
What happened to CZ (Changpeng Zhao) personally?
CZ pleaded guilty in November 2023 to violating the Bank Secrecy Act as part of Binance’s broader $4.3 billion DOJ settlement, paid a personal $50 million fine, stepped down as Binance’s CEO, and was sentenced to four months in federal prison in 2024.
Is BNB legally a security?
This question was never definitively resolved by a final court ruling. A federal judge allowed the SEC’s claim that BNB and the BNB Vault staking program were unregistered securities to proceed to further litigation in June 2024, but the case was dismissed before reaching trial or a final judgment on this specific question.
Why did the SEC drop the lawsuit in 2025?
Following the change in US presidential administration in January 2025, SEC leadership changed significantly, and the agency adopted a broadly more lenient regulatory posture toward the crypto industry, dropping over a dozen enforcement actions initiated under the previous leadership, including the Binance case.
Is Binance still operating legally in the United States?
Following the settlements and dismissals, Binance.US continues operating, though under restrictions agreed to as part of the original DOJ settlement, including limitations on global Binance officials accessing US customer funds directly.
What is the difference between the DOJ case and the SEC case against Binance?
The DOJ pursued criminal charges related to anti-money laundering violations, operating an unlicensed money transmitting business, and sanctions evasion — resolved through Binance and CZ’s guilty pleas in 2023. The SEC pursued separate civil claims specifically alleging securities law violations, including unregistered exchange operations and unregistered securities offerings — this case was later voluntarily dismissed in 2025.
Final Word
The Binance vs SEC story is ultimately less a story about a courtroom verdict and more a story about how dramatically regulatory philosophy can shift with political change — even when the same underlying conduct, the same admissions of guilt, and the same $4.3 billion in criminal penalties remain entirely unchanged throughout.
Binance and CZ’s criminal liability — the guilty pleas, the fine, the prison sentence — happened and remains part of the permanent record. The SEC’s separate civil pursuit of additional securities violations, despite surviving early legal challenges and advancing through significant litigation, ultimately ended not through a trial verdict but through a change in who was making enforcement decisions in Washington.
For anyone trying to understand the genuine state of crypto regulation in the United States, this case offers a clear lesson: the legal questions at crypto’s regulatory core — what counts as a security, how exchanges should be licensed, who bears responsibility for compliance — remain largely unresolved by binding precedent, even after years of litigation against the industry’s largest player.
Disclaimer: This article is for informational and educational purposes only and does not constitute legal or financial advice. Always conduct your own research before making any investment decisions.
