Binance.US, the United States affiliate of cryptocurrency exchange Binance, has reportedly laid off a portion of its workforce in response to the legal action taken by the U.S. Securities and Exchange Commission (SEC) against both entities. The SEC lawsuits alleging the offering of unregistered securities have compelled Binance.US to transition into a “crypto-only exchange,” leading to the decision to downsize its teams and reduce expenditures.
The management of Binance.US described the SEC as a “politically motivated regulator” that necessitated the transition to a crypto-exclusive focus. While the exchange had aimed to avoid this scenario, it found itself compelled to take this step due to the circumstances arising from the lawsuits. Binance.US expressed regret over the departures of the affected employees and pledged to assist in their transition.
Reports indicate that around 50 positions have been eliminated, according to sources cited by Reuters. Binance.US’s LinkedIn page previously listed the company as employing 487 individuals. The SEC’s legal action against Binance.US, Binance, and its founder and CEO, Changpeng “CZ” Zhao, alleges the offering of unregistered securities to the general public. Although the SEC sought a temporary restraining order to freeze Binance.US’s assets, a judge declined the order, allowing the exchange to continue operating in the United States.
Preparing for legal battles and consequences
The job cuts at Binance.US come as the company prepares for an anticipated lengthy and costly legal battle with U.S. regulators. In a letter addressed to its employees, the exchange’s management explained that the reduction in team sizes was necessary to align with the company’s preparations for a protracted litigation process. As a virtual company with no headquarters, Binance refers to its principal place of business for Binance.US as Miami, according to the SEC complaint.
Binance.US has faced various challenges in recent times. Earlier this month, the exchange disclosed that it was being cut off by its payment and banking partners, forcing it to convert into a crypto-only platform. The SEC’s actions last week accused Binance.US and Binance Holdings Ltd., the operator of the larger Binance.com, of mishandling customer funds, misleading investors and regulators, and violating securities regulations. Both companies have disputed the allegations.
In a recent development, Binance.US and the SEC have agreed to work towards a resolution that avoids a complete freeze of assets on the cryptocurrency trading platform. Binance.US has emphasized that an asset freeze would effectively shutter its operations.
As the legal battle between Binance.US and the SEC unfolds, the cryptocurrency exchange is grappling with the need to navigate these challenges while striving to protect its business interests and reputation within the crypto industry.