Binance and SEC Seek 60-Day Pause in Crypto Lawsuit Amid Regulatory Shift

In a significant legal development, Binance and the U.S. Securities and Exchange Commission (SEC) have jointly requested a federal judge to stay the ongoing lawsuit against the cryptocurrency exchange for 60 days. The motion, filed late Monday, signals the first notable step back from the SEC’s previous aggressive enforcement stance on crypto under Democratic leadership.

The filing cites the SEC’s newly formed crypto regulations task force, established last month, as a factor that could "impact and facilitate the potential resolution of this case." This pause in legal proceedings has been interpreted by some as an early indication that the SEC may be adopting a more favorable stance toward the cryptocurrency industry. The shift aligns with President Donald Trump’s commitment to positioning the U.S. as a global leader in the sector.

According to a Reuters report, the SEC, now under Republican leadership, is expected to reevaluate active court cases such as the one against Binance. The regulator had previously argued that Binance and other firms were listing crypto tokens that functioned as unregistered securities. A spokesperson for the SEC declined to comment beyond the contents of the court filing.

At a Federalist Society event on Tuesday, Republican SEC Commissioner Hester Peirce remarked, "We’ve been approaching it backwards, using our enforcement division to set policy."

The SEC initially sued Binance, its U.S. branch, and founder Changpeng Zhao in June 2023, alleging that the company artificially inflated trading volumes, misused customer funds, and misled investors regarding its market surveillance measures.

A Binance spokesperson welcomed the decision to pause the lawsuit, stating, "The SEC’s case has always been without merit and we are eager to put this behind us and to continue our focus on keeping Binance the most secure, licensed, and trusted exchange in the world." The spokesperson also expressed gratitude toward acting SEC Chair Mark Uyeda.

Criticism Over SEC Delay

The decision to stay the case has drawn criticism from some former SEC officials. Corey Frayer, a former SEC regulator, condemned the move, saying, "Delaying a case where the CEO pled guilty to criminal charges and the SEC has an employee dead to rights admitting violation of the securities laws clarifies the SEC’s shifts on crypto may culminate in a full dereliction of duty."

Binance had previously admitted to violating anti-money laundering laws in November 2023. Zhao also served time in prison in connection with a related charge.

Political and Regulatory Changes

The Biden administration’s approach to crypto was notably stricter, with former SEC Chair Gary Gensler urging Congress to grant the agency more authority to regulate what he referred to as the "Wild West" of cryptocurrency. However, since Trump assumed office, the government has made a stark pivot in its stance toward the industry. The president has nominated Paul Atkins, a crypto-friendly Washington lawyer, to lead the SEC. Though Atkins is yet to be confirmed by Congress, the SEC has already begun shifting its focus, reassigning some crypto enforcement attorneys to different areas and tightening its oversight of ongoing investigations.

SEC Commissioner Peirce also acknowledged the "Wild West" analogy often used to describe the crypto sector, stating that it has "positive sides" and that regulators must ensure investor protection while also embracing "the greatness of that American spirit that moved west."

By fLEXI tEAM