US regulators are sending mixed yet decisive signals on crypto enforcement this week. The Treasury Department announced sanctions against Philippines-based Funnull Technology and its administrator, citing their role in enabling thousands of scam websites that defrauded investors out of more than $200 million. Just days later, the Securities and Exchange Commission (SEC) moved to dismiss its long-running lawsuit against crypto exchange Binance and its co-founder Changpeng Zhao, stating the case no longer aligns with current policy direction.
US Treasury Sanctions Philippines-Based Tech Firm Over Role in Global Crypto Scam Network
The US Treasury Department has announced sweeping sanctions against a Philippines-based technology company accused of supporting one of the world’s most extensive crypto scam networks. The move marks one of the most aggressive actions to date by the Treasury’s Office of Foreign Assets Control (OFAC) targeting infrastructure allegedly used to facilitate digital asset fraud.
In a statement issued on May 29, OFAC designated Funnull Technology, along with its alleged administrator Liu Lizhi, a Chinese national, for providing critical backend services to thousands of fraudulent crypto websites that have scammed US citizens and international victims out of more than $200 million.
Bulk Infrastructure for Scammers
According to OFAC, Funnull Technology specializes in purchasing bulk IP addresses from cloud service providers and reselling them to cybercriminals. These IP addresses are then used to host lookalike clones of legitimate financial platforms, a tactic that tricks users into believing they are interacting with trusted institutions, ultimately leading to the theft of their crypto assets.
“These services not only make it easier for cybercriminals to impersonate trusted brands when creating scam websites but also allow them to quickly change to different domain names and IP addresses when legitimate providers attempt to take the websites down,” OFAC explained.
The agency detailed how Funnull's infrastructure made it nearly impossible for legitimate hosting providers and law enforcement to swiftly shut down malicious sites, enabling criminals to maintain uninterrupted scam operations.
In a more chilling revelation, OFAC stated that in 2024, Funnull purchased a repository of software code commonly used by web developers. The firm then secretly altered the codebase to include redirects that sent visitors from real investment websites to phishing pages and even illicit gambling sites.
Links to the “Triad Nexus” Scam Network
Blockchain analytics firm Chainalysis, which collaborated with Treasury investigators, identified Funnull as a central pillar in the so-called ‘Triad Nexus’ — a massive network of over 200,000 unique hostnames tied to fraudulent trading platforms, fake crypto exchanges, and scam investment schemes.
Chainalysis noted in a report released concurrently with the Treasury announcement that two crypto wallet addresses affiliated with Funnull had received payments from suspected cybercriminals, confirming the firm's operational role in the scam ecosystem.
Funnull offers bulk IP addresses to scammers looking to operate scam websites. (Source: Chainalysis)
“Additionally, the addresses show indirect exposure to various types of scams and domain management infrastructure vendors,” the report said.
As part of the sanctions, OFAC added Liu Lizhi to its Specially Designated Nationals and Blocked Persons (SDN) list, effectively freezing any US-based assets and barring all US individuals and entities from conducting business with him. Lizhi, reportedly managing Funnull’s employees and coordinating operations, now faces the full weight of US financial restrictions.
Moreover, any property or interests in property in the US where Funnull or Lizhi holds a 50% or greater interest are now blocked. The action also extends to all US persons, who are prohibited from engaging in transactions with the designated parties. Violators could face severe civil or criminal penalties.
Pattern of Broader Enforcement
The crackdown on Funnull comes as part of a broader campaign by US authorities to dismantle the global digital fraud infrastructure. While many previous sanctions have targeted individuals or laundering mechanisms like Tornado Cash, this case targets a backend service provider that OFAC says has enabled large-scale fraud.
SEC Drops Lawsuit Against Binance in Major Retreat from Crypto Enforcement
Meanwhile, in a landmark development signaling a profound shift in US crypto policy, the Securities and Exchange Commission (SEC) has moved to dismiss its high-profile lawsuit against Binance, the world’s largest cryptocurrency exchange, and its co-founder Changpeng “CZ” Zhao. The decision is the most striking example yet of the SEC’s retreat from its aggressive enforcement stance against the digital asset industry.
A joint motion filed in the US District Court for the District of Columbia on May 29 by the SEC, Binance, and Zhao formally requested the court dismiss the June 2023 lawsuit with prejudice, meaning the case cannot be refiled. The motion cited internal discussions within the SEC’s recently restructured Crypto Task Force and suggested that continued litigation no longer aligned with the agency’s evolving policy goals.
SEC’s Reversal Marks the End of a Pivotal Case
The now-abandoned lawsuit had accused Binance and its US affiliate, BAM Trading, of violating securities laws, misleading investors, and mishandling customer assets. At the time, the June 2023 complaint was considered one of the most consequential cases in the SEC’s campaign to bring the digital asset sector under traditional financial regulations.
But since early 2025, signs of a rollback began to appear. The case was paused twice—in February and April—as internal reviews and political pressure mounted following the 2024 US election. President Donald Trump’s re-election ushered in a new era for the SEC, which he placed under the leadership of former crypto industry advocate Paul Atkins.
Binance celebrated the news on social media platform X, calling the motion a “huge win for crypto” and publicly thanking both President Trump and Chairman Atkins “for pushing back against regulation by enforcement.”
This resolution follows Binance’s earlier settlement with the US Department of Justice (DOJ) in November 2023, in which the company agreed to pay a record $4.3 billion fine. As part of that settlement, Binance admitted to operating as an unlicensed money transmitter, violating US sanctions, and failing to enforce proper Anti-Money Laundering (AML) safeguards.
Zhao, who resigned as Binance’s CEO as part of the DOJ deal, also pleaded guilty to a money laundering charge and was sentenced to four months in prison in April 2024. The DOJ case had effectively resolved the criminal allegations, but the ongoing SEC civil lawsuit had continued to hang over Binance and the broader crypto sector.
Broader SEC Shift Under Trump Administration
The Binance case is not the only enforcement action being unwound. Under Chairman Atkins, the SEC has dropped or settled complaints involving major firms such as Coinbase, Kraken, Consensus, and Ripple, and has quietly ended investigations into entities like Circle, Immutable, and OpenSea.
This marks a stunning departure from the previous administration’s regulatory philosophy. The Biden-era SEC, under former chair Gary Gensler, frequently used lawsuits to classify crypto tokens as unregistered securities and force exchanges and platforms into court battles.
Atkins, by contrast, has promised to move toward a formal regulatory framework for digital assets. The agency has begun convening roundtable discussions with industry leaders and lawmakers to create more consistent guidelines for token offerings, exchange registration, and stablecoin oversight.
Crypto advocates and some Republican lawmakers lauded the SEC’s decision to drop the case as a necessary correction to what they saw as years of regulatory overreach. However, critics warn that the dismissal may set a dangerous precedent.
Legal scholars note that while the SEC retains enforcement powers, this latest retreat will embolden exchanges and DeFi platforms who have long argued that US securities laws were being applied arbitrarily.
