What the SEC’s Truce With Binance Means for Coinbase and Other Crypto Lawsuits

The SEC has agreed to suspend its lawsuit against Binance, the world’s largest cryptocurrency exchange by volume, in a move that some legal experts say signals a momentous shift in regulatory policy towards crypto companies in the United States.

Binance and the SEC jointly filed a motion earlier this week to grant a 60-day pause to the years-long lawsuit, which initially accused Binance of “blatant disregard” of federal securities laws and willful disregard of investor protections, anticipating fresh guidance from the newly created crypto task force within the SEC.

Such a move would have been unthinkable even just months ago while former President Biden and his appointees still held power. But every week of the new Trump Administration has brought massively favorable concessions for the crypto industry, and industry observers had anticipated that the SEC might soon begin to wind down its slate of lawsuits against crypto firms.

Could Coinbase, Ripple, Kraken, and other crypto giants in the SEC’s crosshairs soon be off the hook? Legal experts who spoke with Decrypt were split on the question, with much of the attention on a key line in the joint filing.

Monday’s filing specified that the work of the SEC’s new crypto task force—which is expected to be very favorable to the industry—“may impact and facilitate the potential resolution of this case.”

Robert Heim, a former assistant director of the SEC’s New York regional office, took the language to indicate that the agency is overhauling its interpretation of how securities laws apply to crypto. And if that revision has already impacted the Binance case, it’s likely to affect the rest of the SEC’s crypto cases too.

“The SEC’s case against Binance is centered around allegations they failed to register as an exchange, were acting as an unregistered broker dealer, and improperly clearing crypto assets,” Heim told Decrypt. “Those are the exact same issues that are in play in all of the other big cases the SEC has brought,” he said. 

“If the SEC is, in fact, reevaluating all of its legal theories and enforcement in the area, it could be an opening for all of these cases to be paused and perhaps resolved in the near term,” said Heim.

It’s worth noting that Coinbase, which the SEC likewise charged with securities violations in June 2023, got a federal judge to agree to freeze its own pending lawsuit until an appeals court can give its opinion, effectively pausing its case. Ripple, which secured a partial win in its defense against the SEC in July 2023, also remains optimistic that it will prevail against the SEC’s recent appeal of the case.

Still, not everyone agrees the SEC will call off its enforcement actions against crypto companies entirely. Yuliya Guseva, a law professor and director of the Blockchain and Fintech Program at Rutgers, told Decrypt she does not believe the Binance filing signifies the SEC has suddenly made a sweeping about-face on crypto policy.

“We should be careful not to draw wrong conclusions or make wrong assumptions,” she said. “I think this development simply indicates that the SEC expects that its regulatory policy will change.”

As Guseva sees it, the only certainty at this point is that the SEC is reevaluating its crypto policies. Eventually, those shifts could make certain enforcement actions moot—but it’s a stretch to say, as of today, that Binance, let alone every other crypto company in the agency’s crosshairs, is now in the clear.

Guseva also underscored the possibility that Binance might reach a settlement with the SEC. In late 2023, the crypto exchange agreed to hand over $2.7 billion to the CFTC for violating the commodity regulator’s rules.

Nevertheless, the filing undeniably signals a positive development for Binance, and crypto startups that operate in the United States have good reason to celebrate the news. But even in the unprecedented terrain of the second Trump Administration, cautious optimism may be the wisest approach.