According to Fortune, Binance.US is facing significant challenges, including forced layoffs and declining revenue, following lawsuits from the U.S. Securities and Exchange Commission (SEC).
In newly released court documents, Christopher Blodgett, chief operating officer of Binance.US, revealed that the company had been forced to lay off more than 200 employees, or two-thirds of its workforce, since June.
Forced layoffs and falling income
This downsizing was a direct result of the SEC's lawsuit against Binance, which alleged various forms of misconduct, including mismanagement of customer funds and the offering of registered securities.
Blodgett deplored the serious impact of the SEC's actions, noting that the trading platform's revenue fell by about 75% after the regulator sought a cease-and-desist order in June, aimed at freezing 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 a “vast network of deception.” Notably, legal scrutiny has extended beyond the global entity to its US subsidiary, BAM Trading, with allegations of collusion in “wash trading” aimed at artificially inflating trading volumes.
Although Binance has reached a settlement with various federal agencies, including the Department of Justice, 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 presented to a federal judge in January.
The challenges of Binance.US
The SEC's decision to freeze assets added to Binance.US's challenges, hurting its ability to secure crucial partnerships, including banking and market makers.
Blodgett described the lawsuit and restraining order as a “near-death blow” to the platform's operations, pointing to a drastic reduction in the number of partners from more than 20 to fewer than five in the months following the lawsuit.
Amid the legal battle, Binance.US sought alternative ways to allow users to convert dollars into cryptocurrencies, teaming up with crypto startup MoonPay after losing banking partners. The downturn experienced by Binance.US has coincided with broader market instability, as evidenced by reduced trading activity and prices following high-profile collapses, such as that of FTX in 2022.
Binance.US has also seen previous layoffs, with 100 staff members laid off 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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