According to Fortune, Binance.US is facing significant challenges, including forced layoffs and a decline in revenue, following legal actions initiated by the U.S. Securities and Exchange Commission (SEC).
In newly released court documents, Binance.US Chief Operating Officer Christopher Blodgett disclosed that the company has been compelled to terminate over 200 employees, amounting to two-thirds of its workforce, since June.
Forced Layoffs and Revenue Plunge
This downsizing was a direct consequence of the SEC’s lawsuit against Binance, which alleged various forms of misconduct, including mishandling customer funds and offering registered securities.
Blodgett lamented the serious impact of the SEC’s actions, noting that the trading platform’s revenues plummeted by approximately 75% after the regulatory body sought a restraining order in June, aiming to freeze assets associated with Binance.
The lawsuit, filed in June, included 13 charges against Binance, accusing the exchange and its founder, Changpeng Zhao, of engaging in an “extensive web of deception.” Notably, the legal scrutiny extended beyond the global entity to its U.S. subsidiary, BAM Trading, with allegations of collusion in wash trading to artificially inflate trading volumes.
While Binance reached a settlement with various federal agencies, including the Justice Department, the Treasury Department, and the Commodity Futures Trading Commission, worth $4.3 billion, the SEC lawsuit remains ongoing. Binance’s efforts to dismiss the suit were addressed in a motion argued before a federal judge in January.
Binance.US’s Challenges
The SEC’s move to freeze assets added to Binance.US’s challenges, impairing its ability to secure crucial partnerships, including banking services and market makers.
Blodgett described the lawsuit and restraining order as a “near-mortal blow” to the platform’s operations, highlighting a drastic reduction in the number of partners from over 20 to less than five in the months following the legal action.
Amid the legal battle, Binance.US sought alternative means for users to convert dollars into cryptocurrencies, partnering with the crypto startup MoonPay after losing banking partners. The downturn experienced by Binance.US coincided with broader market instability, as evidenced by decreased trading activity and prices in the aftermath of high-profile collapses, such as that of FTX in 2022.
Binance.US has also experienced previous layoffs, with 100 staff members let go in September, alongside the departure of CEO Brian Shroder. Meanwhile, the legal saga continues, with a sentencing hearing for Changpeng Zhao related to the DOJ settlement scheduled for April.
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