Binance US laid off 2/3 of staff in wake of SEC lawsuit, revenue plunged 75% after ‘near-mortal blow’

The Securities and Exchange Commission hit Binance with a massive demand In June of this year, and shortly after, the US branch of the leading cryptocurrency exchange "imploded," according to new court documents filed Tuesday.

In a December statement released on Tuesday, Binance.US COO Christopher Blodgett revealed that the company has been forced to lay off more than 200 employees, or two-thirds of its workforce, since June as a result of SEC action.

"Our trading volumes and overall business have imploded," Blodgett said in the statement, noting that the trading platform's revenue fell about 75% after the SEC sought a restraining order in June to freeze assets.

'Network of deception'

In the June lawsuit, the SEC filed 13 charges against Binance, accusing the exchange of misappropriating customer funds and offering registered securities, alleging that the company and founder Changpeng Zhao had engaged in an "extensive web of deception."

The lawsuit targeted not only the global company but also its U.S. subsidiary, which operates under an entity called BAM Trading. In separate legal complaints, both the SEC and the Department of Justice claimed that Binance.US, which Binance said was independent, had engaged in so-called wash trading in collusion with its parent company to artificially inflate volume on the platform.

In November, Binance settled with the Department of Justice, the Department of the Treasury, and the Commodity Futures Trading Commission, agreeing to a $4.3 billion settlement, although the SEC was conspicuously absent from the deal. Binance agreed to a complete exit from the US as part of the deal, although an official saying that BAM Trading was not affected by the agreement.

The SEC lawsuit, which involves broader allegations of fraud, is ongoing, and Binance is seeking to dismiss the lawsuit in a motion that was argument before a federal judge in DC in January.

As part of the SEC's enforcement action, it took the extraordinary step of trying to freeze the assets of the American trading platform, arguing that Zhao could withdraw the funds from the exchange. A judge rejected the request in June, although it still significantly harmed Binance.US's business, according to Blodgett's statement.

In the filing, he described the lawsuit and restraining order as a "near-fatal blow," harming the platform's ability to find partners, including banks and market makers, which dropped from more than 20 to fewer than five in the months following the claim. . In August, Binance.US turned to cryptocurrency startup MoonPay as an alternative way for users to convert dollars into cryptocurrency after losing their banking partners. The recession coincided with broader chills across the cryptocurrency market, with trading and prices declining sharply after the collapse of high-profile companies like FTX in 2022.

Binance.US previously reported that it had laid off 100 employees in September and that CEO Brian Shroder had left the company. A sentencing hearing has been held for Zhao related to the Justice Department settlement. programmed for April.

A spokesperson did not immediately respond to a request for comment.

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