SEC Lawsuit Results in Binance US Cutting Two Thirds of Employees

Binance.US has been forced to cut two-thirds of its staff following a severe drop in revenue and assets after the Securities and Exchange Commission (SEC) filed a lawsuit against them. The lawsuit’s fallout had a profound impact on the company’s financial health and its ability to maintain normal operations. Christopher Blodgett, an executive at Binance.US, revealed in a deposition that the legal action initiated by the SEC had caused a significant loss of trust among institutional clients, leading to a substantial decline in the platform’s assets and revenues.

The SEC’s decision to issue a Temporary Restraining Order (TRO) against Binance.US had immediate and severe consequences. According to Blodgett’s testimony, the platform witnessed a staggering $1 billion in assets being withdrawn by users. This exodus contributed to a 75% reduction in the company’s revenue and necessitated the layoff of 200 employees, which constituted two-thirds of the workforce. The loss of personnel has since hampered the exchange’s capacity to manage regulatory inquiries effectively, stretching the remaining staff thin. Last year, several high ranking executives left the US branch of the exchange as well.

Further exacerbating the situation, Binance.US has encountered soaring legal fees, with costs hitting the $10 million mark. Audit expenses have also skyrocketed, multiplying tenfold. Complicating matters, the exchange has struggled to maintain banking relationships. Banks have either demanded excessively high collateral or severed ties entirely, leaving Binance.US customers unable to deposit or withdraw fiat currency. This has significantly restricted the company’s operational capabilities.

Blodgett’s deposition highlighted the challenges in securing new banking partners, describing Binance.US as “radioactive” to potential financial institutions. The fear of attracting regulatory scrutiny has made banks wary of associating with the crypto exchange. This standoff with banks underscores the broader difficulties Binance.US faces in navigating the aftermath of the SEC lawsuit, which has not only strained its financial resources but also its standing in the banking sector.