by Jude Ayua

The US Securities and Exchange Commission (US SEC) and Binance Holdings Limited (Binance), alongside other Defendants in the SEC’s ongoing case against Binance, on 10 February, jointly moved to stay the case for 60 days. Judge Amy Berman Jackson granted the order on 13 February, and the suit will be stayed until 14 April 2025. They proposed to submit a joint status report, including whether they need a continuation of the stay, at the expiration of the 60-day stay period.

Background to the case 

In June 2023, the US SEC filed a lawsuit against Binance and its co-founder, Changpeng ‘CZ’ Zhao, alleging violations including operating as an unregistered exchange, broker, and clearing agency, and engaging in deceptive practices. The other Defendants are BAM Trading Service Inc., and BAM Management US Holdings Inc. This pause could be an opportunity for Binance to benefit from the Trump Administration’s crypto-friendly regulatory approach.

Implications of the stay

In granting an application for a stay of proceedings before the US courts, the court considers if the applicant’s motion will be prejudicial to the other party.  In this case, being a joint motion, there is no prejudice to any of the parties. The parties submitted that a stay could save them resources as it would eliminate the need for merits discovery if they reach an early resolution.

The parties cited the SEC’s new Crypto Task Force launched to help the SEC develop a regulatory framework for crypto assets, arguing the Task Force’s work may impact and potentially facilitate the resolution of their case. The parties also stated that a stay is “in the interest of judicial economy.”

Read more: US SEC Crypto Task Force: A New Journey Begins under Chair Pierce.

Commenting on the development, a former SEC official, Corey Frayer, criticized the stay.

“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,” Frayer told Reuters.

Conversely, a Binance spokesperson said, “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.”

Other ongoing cases at US SEC

On 29 January 2025, a court granted stay in the suit between US SEC and Dragonchain Inc. After an initial stay granted in December 2024, which expired 27 January, Dragonchain applied for another 90-day stay. Like Binance, Dragonchain cited President Donald Trump’s Executive Order on Digital Assets and developments at the SEC under Acting Chair Mark T Uyeda as possibly impacting the case.

Eleanor Terret, Fox Business news reporter, posting about the SEC-Binance proposed pause on X, said she expects to see other non-fraud cases including those of Ripple, Coinbase, and Kraken, “follow suit in this manner.” The backgrounds to the mentioned cases are as follows:

1. Ripple: In December 2020, the US SEC sued Ripple Labs for the alleged public offering of its XRP token as unregistered securities. A court ruled in July 2023 that XRP is not a security when sold to the general public. In 2024, following a court decision ordering Ripple Labs to pay $125 million to the US SEC, the agency appealed, insisting on its initial claim of $2 billion against Ripple. The case is still pending in the US Court of Appeals for the Second Circuit.
2. Coinbase: In July 2024, Coinbase filed a suit against the US SEC for rejecting the exchange’s requests of SEC to disclose past crypto investigations and the agency’s failure to provide regulatory clarity for the crypto sector.​ The US SEC first sued Coinbase in June 2023 for allegedly operating as an unregistered broker, exchange, and clearing agency. 
3. Kraken: The US SEC filed charges against Kraken in November 2023 accusing Kraken of operating as an unregistered securities exchange. However, Kraken claimed that the US SEC targeted it because of its 10 May 2023 testimony in the House Financial Services Committee and the House Agriculture Committee about the SEC’s overreach in crypto.

With over 100 enforcement actions brought by the SEC between 2021 and 2024, other notable pending cases include Transform Labs and Green United.

Read also: The New US SEC’s Crypto Task Force: Prospects for regulation.

Prospects and expectations

As both SEC and Binance have expressed optimism about the potential of the work of the SEC’s new Task Force facilitating their settlement, a positive outcome would have broader impact on the US crypto market. The parties could settle within the 60-day stay period, and other ongoing cases may adopt the same approach. Resolving these cases would help the SEC clear enforcement actions off its path and focus on policy formulation for the crypto sector. US SEC Commissioner Hester M Pierce, Chair of the Task Force, while disclosing the focus of their work, said the enforcement cases were unnecessary and did not benefit anyone.

Read also: Trump’s Executive Order on Digital Assets: Policy Implications.      

 

 

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Jude Ayua is a policy analyst at CAB. A lawyer, Jude is an associate at Infusion Lawyers where he is a member of the Blockchain & Virtual Assets Group. He is also a member of the Policy & Regulations Committee of the Stakeholders in Blockchain Technology Association of Nigeria (SiBAN). Jude reports and writes on crypto policy and regulations. jude@infusionlawyers.com