Regulator Requests 60-Day Stay Amid Policy Reassessment
The U.S. Securities and Exchange Commission (SEC) is seeking to pause its high-profile lawsuit against cryptocurrency exchange Binance, signaling a potential shift in its stance on digital assets. The request comes as the regulator attempts to present itself as more crypto-friendly under the leadership of Acting Chairman Mark Uyeda.
On Monday, Binance and the SEC filed a joint motion in the U.S. District Court for the District of Columbia, requesting a 60-day stay in the case. The filing revealed that the SEC approached Binance with the request, citing the work of a new crypto task force launched by Uyeda. The task force aims to foster better relations with the cryptocurrency industry and could play a role in resolving the case.
A Major Shift in SEC’s Crypto Approach
The move is being seen as a significant departure from the enforcement-heavy approach of former SEC Chairman Gary Gensler, under whom the lawsuit was originally filed. At the time, Gensler accused Binance and its founder, Changpeng Zhao, of engaging in a “web of deception,” with the SEC’s official X account even highlighting a message from Binance’s chief compliance officer admitting, “We are operating as a fking unlicensed securities exchange in the USA bro.”
Now, under Uyeda, the SEC appears to be reassessing its regulatory approach. When launching the new crypto task force last month, Uyeda acknowledged that the agency had been primarily using enforcement actions to regulate the industry retroactively, often applying “novel and untested legal interpretations.”
Carol Goforth, a professor at the University of Arkansas School of Law, described the SEC’s motion as the first “tangible action in existing enforcement cases that recognizes a change in direction of the agency.”
Binance’s Legal Troubles and the Wider Crypto Crackdown
Binance, the world’s largest cryptocurrency exchange, has been at the center of regulatory scrutiny. In a separate case, the company agreed to a $4 billion settlement, and its founder, Zhao, pleaded guilty to a felony related to money laundering failures on the platform.
The SEC’s lawsuit against Binance was part of a broader crackdown on the cryptocurrency industry, which also targeted major exchanges like Coinbase. Regulators have argued that many digital assets should be classified as securities and subjected to stricter oversight—an approach that drew heavy criticism from the crypto industry.
This scrutiny intensified after the collapse of FTX, the crypto exchange founded by Sam Bankman-Fried, which triggered a wave of legal action and regulatory scrutiny. The crypto industry, in turn, accused the Biden administration and the SEC of unfairly targeting digital asset firms, leading to significant political lobbying efforts.
Political and Industry Reactions
Former SEC official Corey Frayer criticized the agency’s decision to pause its case against Binance, warning that it could signal a broader shift in favor of crypto firms.
“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,” Frayer said.
Others believe this shift could extend to other SEC lawsuits against cryptocurrency exchanges. Securities law expert James Murphy predicted that “all of these cases will be either dismissed outright or settled on very favorable terms to the defendants.”
Binance welcomed the SEC’s request for a stay, maintaining that the lawsuit “has always been without merit.” The company also praised Uyeda’s leadership, calling it a “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.”
What’s Next for Crypto Regulation?
As the SEC reassesses its crypto enforcement strategy, industry experts and policymakers will be closely watching for further indications of regulatory easing. The outcome of this case—and the potential resolution of similar lawsuits—could shape the future of digital asset regulation in the U.S.
A ruling on the joint motion to pause the Binance case is expected in the coming weeks.
