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SEC dismisses lawsuit with prejudice

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Binance says regulation by enforcement stifles innovation

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SEC previously dismissed case against Coinbase exchange

(Adds Binance comment, background, earlier criminal proceeds,

SEC Chair Atkins' plans for cryptocurrency oversight, byline)

By Jonathan Stempel

May 29 (Reuters) - The U.S. Securities and Exchange

Commission on Thursday voluntarily dismissed its civil lawsuit

against Binance, the world's largest cryptocurrency exchange,

extending the regulator's new approach to cryptocurrencies since

President Donald Trump reentered the White House.

A joint stipulation of dismissal signed by lawyers for the

SEC, Binance and Binance founder Changpeng Zhao was filed in the

Washington, D.C., federal court.

The SEC called the dismissal appropriate "in the exercise of

its discretion and as a policy matter."

Neither the SEC nor its lawyers immediately responded to

requests for comment. The dismissal is with prejudice, meaning

the regulator cannot pursue the enforcement case again.

In a statement, a Binance spokesperson called the dismissal

"a landmark moment. We're deeply grateful to (SEC) Chairman Paul

Atkins and the Trump administration for recognizing that

innovation can't thrive under regulation by enforcement."

The SEC sued Binance and Zhao in June 2023, accusing the

exchange of artificially inflating trading volumes, diverting

customer funds and misleading investors about its surveillance

controls.

Binance was also accused of unlawfully facilitating trading

of several cryptocurrency tokens that SEC leadership during

President Joe Biden's administration believed should have been

registered as securities.

The case was separate from Binance's November 2023 guilty

plea and more than $4.3 billion penalty for violating federal

anti-money laundering and sanctions laws through lapses in

internal controls.

In February, the SEC dismissed a separate enforcement

lawsuit accusing Coinbase, the largest U.S. cryptocurrency

exchange, of arranging trading in at least 13 tokens that were

also unregistered securities.

Atkins said on May 12 that developing a regulatory framework

that establishes "clear rules of the road" for issuing, trading

and safekeeping crypto assets, while discouraging lawbreakers,

would be a key priority of his SEC leadership.