Binance.US, the American arm of the global cryptocurrency exchange, grapples with significant challenges following legal actions initiated by the U.S. Securities and Exchange Commission (SEC). In response to the SEC lawsuit filed in June, the company has been forced to terminate over 200 employees, representing two-thirds of its workforce since June, according to newly released court documents.
Revenue decline and regulatory scrutiny
The legal scrutiny intensified following allegations of misconduct by Binance and its founder, Changpeng Zhao. The SEC’s lawsuit, comprising 13 charges, accused the exchange of various forms of misconduct, including mishandling customer funds and offering registered securities.
Consequently, Binance.US’s revenues witnessed a staggering decline of approximately 75%, attributed to the SEC’s actions seeking a restraining order to freeze assets associated with the exchange.
Impact on operations and partnerships
Christopher Blodgett, the Chief Operating Officer of Binance.US, lamented the severe impact of the SEC’s actions, describing them as a “near-mortal blow” to the platform’s operations. The regulatory challenges have impaired Binance.US’s ability to secure crucial partnerships, including banking services and market makers. The number of partners dwindled significantly from over 20 to less than five after the legal action.
Despite reaching a settlement with various federal agencies, including the Justice Department, the Treasury Department, and the Commodity Futures Trading Commission, valued at $4.3 billion, Binance’s legal battle with the SEC persists. In January, a motion argued before a federal judge addressed efforts to dismiss the lawsuit. However, the SEC’s move to freeze assets has compounded Binance.US’s challenges, further hampering its operations.
Binance adapting to market dynamics
In response to the legal turmoil and the loss of banking partners, Binance.US sought alternative means for users to convert dollars into cryptocurrencies. The company partnered with the crypto startup MoonPay to facilitate these transactions.
The downturn experienced by Binance.US coincided with broader market instability, exacerbated by decreased trading activity and prices following high-profile collapses, such as that of FTX in 2022.
Before the recent layoffs, Binance.US had undergone staff reductions in September, with 100 employees let go alongside the departure of CEO Brian Shroder. The ongoing legal saga casts a shadow over the company’s operations, with a sentencing hearing for Changpeng Zhao related to the DOJ settlement scheduled for April.
A Step-By-Step System To Launching Your Web3 Career and Landing High-Paying Crypto Jobs in 90 Days.