Binance.US faces fallout from SEC lawsuit, revenue drops 75%
The fallout from the U.S. Securities and Exchange Commission’s (SEC) lawsuit against Binance.US last June continues to impact the cryptocurrency exchange, recent court documents reveal.
According to a new court filing, Binance.US Chief Operating Officer Christopher Blodgett revealed that the SEC lawsuit forced the company to lay off over 200 employees, roughly two-thirds of its workforce, following a 75% decline in revenue.
Blodgett claims that there was “no actual wrongdoing” involved with Binance.US, despite the adverse effects of the SEC’s legal actions. He highlighted the drastic impact on the exchange’s trading volumes and overall business operations, noting a loss of over $1 billion in crypto and fiat assets immediately following the SEC’s temporary restraining order.
The court document further reveals that Binance.US faced challenges beyond financial losses, including a loss of trust from customers and difficulties in securing new banking partners due to concerns about regulatory scrutiny.
Additionally, the SEC claimed that Binance.US, operating under BAM Trading Services, has been uncooperative in providing essential information regarding the custody of customer assets, alleging an impasse in the ongoing investigation. The SEC’s lawyers asserted that BAM Trading Services had refused to comply with basic discovery obligations, hindering the progress of the investigation.
In response, Binance.US refuted the SEC’s allegations, stating that it had complied with the regulator’s requests for information and had gone “above and beyond” its obligations to cooperate.
Earlier in November, Changpeng ‘CZ’ Zhao resigned from his position as chairman of the board for Binance.US, distancing himself from the governance of the American division of the cryptocurrency exchange. Zhao later reached a $4.3 billion settlement with the U.S. Department of Justice, admitting to money laundering charges. He faces his criminal sentencing hearing on April 3, where he could receive up to 18 months in prison.
Through a proxy agreement, Zhao has transferred his voting rights, which changes his role in Binance.US to one of purely economic interest without governance influence. This came as a judge ordered Zhao to remain in the U.S. while awaiting sentencing, pending further review.
Despite the legal developments of its parent exchange, Binance.US stated that it is not involved in the recent settlements and currently has no outstanding enforcement issues with the Department of Justice, the Financial Crimes Enforcement Network, the Office of Foreign Assets Control, or the Commodity Futures Trading Commission. The company asserts that it remains operational and dedicated to providing its customary services to customers.
