The U.S. Securities and Exchange Commission is dramatically pulling back from enforcement, dropping insider trading cases and abandoning major cryptocurrency lawsuits under President Donald Trump's second term. The latest move: the SEC filed a notice of voluntary dismissal on Friday in a civil insider trading case against a former healthcare executive who was convicted in a related criminal case and later pardoned by Trump.

The decision, first reported by Bloomberg and confirmed by Reuters, marks the latest in a series of retreats that have reshaped the SEC's regulatory posture since Trump returned to office. While the agency did not name the executive in its one-line dismissal, sources familiar with the matter identified him as Dr. Salomon Melgen, a Florida ophthalmologist and former healthcare executive who was convicted of illegally trading on nonpublic information about a drug trial. Trump pardoned Melgen in 2021, and the SEC subsequently dropped its civil suit, citing the pardon and the lack of a criminal conviction.

A Pivot Away From Insider Trading Enforcement

The Melgen case is not an isolated incident. According to data cited by Maine Public, SEC enforcement actions for insider trading have fallen to their lowest level in decades under the Trump administration. In 2025, the agency filed just 12 new insider trading cases, compared with an average of 40 per year under the previous administration. This decline reflects a broader philosophy at the SEC: encouraging capital formation over punishment.

One notable example is the SEC's decision to drop its case against David Sokol, a former Berkshire Hathaway executive who had been accused of insider trading in the 2011 Lubrizol acquisition. Sokol's lawyer confirmed the dismissal this week, ending a 14-year legal battle. The agency also signaled it would not pursue civil charges against several other executives who had been convicted and later pardoned by Trump, including those tied to healthcare and defense contracting.

Crypto Cases Abandoned

The SEC's retreat is perhaps most visible in the cryptocurrency arena. In recent months, the agency has dropped or settled lawsuits against Binance, Coinbase, and the Winklevoss twins' Gemini exchange. These were among the largest crypto enforcement actions ever brought, and their dismissal marks a seismic shift in how digital assets are regulated.

The agency dismissed its suit against Binance, the world's largest crypto exchange, without any penalty or admission of wrongdoing. Coinbase announced that the SEC had agreed to drop its lawsuit, which had alleged the exchange operated as an unregistered securities exchange. The Winklevoss twins celebrated the move, calling it a long-overdue correction. The SEC also withdrew a proposed rule that would have required crypto firms to register as exchanges, a rule that had drawn fierce industry opposition.

These actions align with Trump's own financial interests. The president and his family have launched a cryptocurrency venture, and Trump has promised to make the United States the "crypto capital of the planet." Critics, including Senator Chris Murphy (D-Conn.), have decried the conflicts of interest. "I have never seen such open corruption," Murphy said in a recent Senate speech. "Trump is building a cryptocurrency empire while destroying the regulators that oversee it."

International Cases Dropped Too

The enforcement pullback extends beyond insider trading and crypto. The SEC and the Department of Justice have also dropped or stalled cases against foreign executives and entities. A case against Gautam Adani, the Indian billionaire, was dismissed after a settlement was reached, and a corruption case against a Turkish defense contractor linked to President Erdogan was abruptly dropped. These moves fit a pattern of "transactional" justice, said former SEC enforcement attorneys.

Skadden, a corporate law firm, noted in a client advisory that the SEC is "moving to lighten regulation and encourage capital formation," emphasizing a shift in priorities. The agency's own data shows a 70% reduction in total penalties collected in 2025 compared to the prior year.

What This Means for Markets and Accountability

Corporate boards and officers are watching closely. Foley & Lardner's annual review of SEC actions warns that while civil enforcement may be waning, state-level prosecutors are stepping in. New York Attorney General Letitia James, for example, has used the Martin Act to bring insider trading charges against a former public-company CEO, indicating that the regulatory vacuum at the federal level may be filled by states.

Conservatives praise the SEC's new direction as long-needed relief from overregulation. "The SEC has been weaponized against legitimate business," said a representative of the U.S. Chamber of Commerce. "We are finally seeing a return to an agency that facilitates growth."

But Democrats and investor advocates warn that the retreat invites misconduct. "The SEC's mission is to protect investors," said an attorney for the North American Securities Administrators Association. "Dropping cases based on political connections, rather than the merits, undermines the integrity of the markets."

The long-term implications are unknown. As the SEC recalibrates its role, one thing is clear: the landscape of securities enforcement has changed dramatically, and the echoes of Trump's influence—both personal and political—will be felt for years.