Why the SEC dropped its lawsuits against Coinbase, Kraken and Binance, and what it means for you

For two years, the biggest legal fight in US crypto was the SEC’s lawsuits against the largest exchanges. The SEC argued that Coinbase, Kraken and Binance were running businesses that should have been registered with it. Then, in 2025, it dropped all three cases.

This guide explains what the SEC alleged, why it changed course, what the dismissals did and didn’t decide, and what it means if you use these platforms. For the separate criminal and Treasury cases against Binance, see Binance’s $4.3 billion US settlement.

What the SEC alleged in 2023

The three complaints followed a similar pattern. The SEC argued that some crypto assets traded on these platforms were securities, so the platforms needed to register.

The SEC said that failing to register deprived investors of protections such as SEC inspection, record-keeping requirements and safeguards against conflicts of interest.

Kraken had already settled a separate SEC case in February 2023: without admitting or denying the allegations, it agreed to stop offering or selling securities through crypto staking services or programs, and to pay $30 million.

Exchange, broker, dealer, clearing agency: what the labels mean

The SEC’s Kraken release spelled out why it saw a crypto platform as several regulated businesses rolled into one. According to the complaint, Kraken:

• provided a marketplace bringing together orders from many buyers and sellers under fixed rules, so it acted as an exchange;
• carried out trades for its customers’ accounts, so it acted as a broker;
• bought and sold for its own account, so it acted as a dealer;
• helped settle customers’ trades and acted as a depository, so it acted as a clearing agency.

The SEC said Kraken intertwined these traditional services without registering any of them, depriving investors of protections such as safeguards against conflicts of interest.

Why staking was in the cases

Staking featured too. The Coinbase complaint and Kraken’s earlier settlement both concerned staking-as-a-service, where an exchange pools customers’ coins and stakes them on a proof-of-stake network. The SEC’s 2023 Kraken release warned that customers who hand tokens to such services lose control of them and take on the platform’s risks with little protection. For how staking works, and what US regulators have said about it since, see what is crypto staking?

The turn in 2025

On 21 January 2025, the SEC’s acting chairman launched a Crypto Task Force to develop “a comprehensive and clear regulatory framework” for crypto. The announcement was frank about the past: it said the SEC had relied mainly on enforcement actions to regulate crypto, often with novel and untested legal interpretations, leaving confusion about what was legal.

The dismissals followed:

In each case, the SEC added that the decision didn’t necessarily reflect its position on any other case.

What the dismissals did and didn’t decide

• No court ruling. The cases ended by agreement, through joint stipulations. No court decided whether the exchanges broke securities law.
• Not a finding on the merits. The SEC said so explicitly for Coinbase and Kraken.
• Not registration. Dropping a case doesn’t make a platform an SEC-registered exchange or broker.
• Not the end of other cases. The SEC said its Cyber and Emerging Technologies Unit would still go after fraud involving crypto. And Binance’s November 2023 settlements with FinCEN, OFAC, the CFTC and the Justice Department were separate from the SEC’s civil case.

What came after

The SEC has since tried to answer the question at the heart of these cases: which crypto assets are securities. In March 2026, it set out categories of crypto assets and listed bitcoin and ether among its examples of digital commodities, which aren’t themselves securities. See is crypto a security? The Howey test.

What it means for you

• Your protections haven’t changed. Crypto held on an exchange still isn’t covered by SIPC the way a brokerage account’s securities are. See is your crypto insured?
• Other regulators still apply. Exchanges serving US customers deal with FinCEN, state licensing such as the New York BitLicense and California’s DFAL, and the CFTC for derivatives.
• Binance.com is still off-limits. The SEC dismissal didn’t affect Binance’s obligation, under its Treasury settlement, to stay out of the US.
• Check registrations yourself. See how to check if a crypto exchange is registered.