Recently, Binance.US has been dealing with significant challenges, including forced layoffs and a decline in revenue, all stemming from legal actions initiated by the U.S. Securities and Exchange Commission (SEC). According to court documents, the Chief Operating Officer of Binance.US revealed that the company had to let go of over 200 employees, which accounted for two-thirds of its workforce, since June. These layoffs were a direct result of the SEC’s lawsuit against Binance, accusing the exchange of various forms of misconduct, such as mishandling customer funds and offering registered securities.
Financial Struggles
The repercussions of the SEC’s actions were severe, with the trading platform’s revenues taking a massive hit of around 75% after the regulatory body sought a restraining order in June to freeze assets associated with Binance. The lawsuit, which included 13 charges against Binance and its founder Changpeng Zhao, alleged an “extensive web of deception.” This legal scrutiny not only targeted the global entity but also its U.S. subsidiary, BAM Trading, with allegations of collusion in wash trading to artificially inflate trading volumes.
Operational Setbacks
Despite reaching a settlement with various federal agencies worth $4.3 billion, including the Justice Department, the Treasury Department, and the Commodity Futures Trading Commission, Binance’s legal battle with the SEC is far from over. The freeze on assets by the SEC hindered Binance.US’s ability to secure crucial partnerships, such as banking services and market makers. The lawsuit and restraining order were described as a “near-mortal blow” to the platform’s operations, leading to a significant reduction in the number of partners from over 20 to less than five in the months following the legal action.
In an attempt to navigate the challenges brought on by the legal battle, Binance.US sought alternative means for users to convert dollars into cryptocurrencies. The platform partnered with the crypto startup MoonPay after losing banking partners. However, the struggles faced by Binance.US were not isolated, as market instability and decreased trading activity were evident across the industry, following high-profile collapses like that of FTX in 2022.
The legal woes for Binance.US continue, with a sentencing hearing for Changpeng Zhao related to the DOJ settlement scheduled for April. The company has also experienced prior layoffs, with 100 staff members being let go in September, alongside the departure of CEO Brian Shroder. As the legal battle with the SEC persists, Binance.US remains in a challenging position, striving to overcome the obstacles and regain its footing in the market.
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