The SEC lawsuit led to layoffs and revenue declines at Binance.US.
Key Takeaways
- Binance.US has drastically reduced its workforce and faces a severe decline in revenue following the SEC’s temporary injunction.
- The company lost important banking relationships, complicating fiat trading while also increasing legal and audit costs.
- With the industry watching the situation carefully due to regulatory pressure, exchanges are struggling to find new banking partners.
According to recent court documents, the cryptocurrency exchange Binance.US has drastically reduced its workforce and seen a sharp decline in revenue.
This confusion followed the Securities and Exchange Commission (SEC). Last year, an attempt was made to stop the company’s operations through a temporary restraining order (TRO).
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Binance.US executive Christopher Blodgett highlighted the dire consequences of the SEC’s actions in a December 2023 deposition. According to Blodgett, the imposition of TROs has led to rapid Escaping about $1 billion Across both cryptocurrency and fiat assets On the platform.
These dramatic losses not only affected the company’s liquidity; Market confidence drops significantly.
The fallout from these events was severe and Binance.US 75% decrease in sales, urge the company Laid off 200 employees, Or two-thirds of the total workforce.
Staff reductions The exchange’s capacity to process SEC discovery requests was limited. Because the rest of the employees are overwhelmed with responsibility.
The situation worsened as follows: banking Partner, Beware of regulatory scrutiny. They either asked for higher collateral or ended the relationship altogether. Blodgett explained further:
As a result, our customers were prevented from depositing and withdrawing fiat currency on the platform, effectively stifling our business.
Blodgett’s testimony highlighted the difficulties Binance.US faced in securing new banking partnerships, describing the company as follows: It appears “radioactive” in the eyes of potential financial allies. Banks fear the repercussions of partnering with the exchange, including the threat of a subpoena from the SEC.
Moreover, Binance.US Increased operating costs. Legal costs soared to $10 million, and audit costs increased tenfold.
While Binance.US navigates these turbulent times, the industry is also observing efforts to adapt and recover after such a major setback.
Another update to this legal battle occurred when Binance’s former CEO Changpeng Zhao attempted to leverage his multibillion-dollar stake in Binance.US for a brief return to the United Arab Emirates.
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