Binance.US fires staff after SEC lawsuit.
The latest report from Reuters reveals that Binance’s US affiliate (Binance.US) has started laying off staff after being sued by the US Securities and Exchange Commission (SEC) last week. Two anonymous sources familiar with the matter provided this information to Reuters.
One of the sources stated that nearly 50 employees from Binance.US’s legal, compliance, and risk departments have been laid off since the SEC’s filing on June 5. A Binance.US spokesperson has yet to respond to this story regarding staff layoffs.
On June 14, two Binance.US employees announced on LinkedIn that they were leaving the company due to the layoffs.
The SEC accused Binance and its CEO Changpeng Zhao on June 5 of creating Binance.US to circumvent securities laws designed to protect US investors. Binance has stated that it will “vigorously” defend itself against these accusations.
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The SEC also filed a lawsuit against BAM Trading, the operating company of Binance.US, claiming that it misled investors regarding the platform’s trading controls, which the SEC alleges were non-existent.
The following day, the SEC requested a federal court to freeze Binance.US’s assets, which include over $2.2 billion in cryptocurrencies and around $377 million in US dollar bank accounts. The SEC expressed concerns that the exchange might transfer these funds overseas. Binance.US responded by calling the request unwarranted and stating that the SEC’s allegations were unjustified.
However, earlier this week, the judge rejected the SEC’s proposal to freeze funds and urged both parties to reach a common ground amicably regarding the issue of handling funds.
Binance.US Market Share Comes Crashing Down
Following the SEC lawsuit, Binance.US’s market share has plummeted, and the exchange is facing a significant liquidity shortage. After the SEC lawsuit, Binance had to suspend USD deposits on the platform and stated that it would shift toward becoming a crypto-only exchange.
Binance.US mentioned a “very costly litigation process” in documents accessed by blockchain as the reason behind the latest layoffs. The documents stated:
“As part of this transition, and because of our preparation for a multi-year and very costly litigation process, the Board has asked Management to shrink the size of our teams across the company and reduce our burn rate. Unlike every other US crypto company, we have been working to avoid this scenario, but circumstances have now shifted. This was a very hard decision – one that we didn’t take lightly. We are sad to see our colleagues depart, but we wish them the best and will do what we can to assist them in this transition.”
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