Binance.US Lawsuit Causes The Exchange To Be Heavily Affected

Key Points:

• Binance.US lawsuit with the SEC caused layoffs and financial losses for the company.
• Binance faced accusations of mishandling funds, leading to legal actions and settlements.
• Ongoing legal battles and compliance issues impact Binance’s operations.

According to Fortune, the Securities and Exchange Commission (SEC) lawsuit against Binance, filed in June, has had significant repercussions on the leading crypto exchange’s U.S. arm, according to recent court documents.

Binance.US Lawsuit Shakes The Company: Layoffs and Losses

Binance.US COO Christopher Blodgett revealed in a deposition released on Tuesday that over 200 employees, approximately two-thirds of its workforce, have been laid off since June due to the SEC’s actions.

Blodgett stated that trading volumes and revenues for the platform plummeted by around 75% after the SEC sought a restraining order in June to freeze assets. The SEC filed 13 charges against Binance, alleging mishandling of customer funds and offering registered securities, accusing the company and founder Changpeng Zhao of engaging in deceptive practices.

The Binance.US lawsuit targeted both the global company and its U.S. arm, BAM Trading. The SEC and Justice Department accused Binance.US of wash trading to inflate platform volume. Binance settled with multiple agencies for $4.3 billion in November, agreeing to exit the U.S., though BAM Trading was reportedly unaffected.

Compliance Concerns and Legal Battles

Despite ongoing efforts by Binance to dismiss the SEC suit, the regulatory agency has accused Binance.US of non-compliance with information requests, particularly regarding customer assets. The U.S. government has also sought to modify bail conditions for former CEO Changpeng Zhao, citing concerns about his travel.

The SEC’s attempt to freeze Binance.US’s assets were rebuffed by a judge in June but still severely impacted the platform’s operations. Blodgett described the Binance.US lawsuit as a “near-mortal blow,” hindering partnerships and forcing the platform to seek alternative solutions like crypto startup MoonPay for conversions.

The downturn coincided with broader market declines, reflecting challenges within the crypto industry following high-profile collapses like FTX in 2022.