As revealed in recent court documentation, the crypto exchange Binance.US has drastically reduced its workforce and experienced a steep decline in revenue.
This turmoil followed the Securities and Exchange Commission's (SEC) attempt to halt the company's operations last year through a Temporary Restraining Order (TRO).
Did you know?
Want to get smarter & wealthier with crypto?
Subscribe - We publish new crypto explainer videos every week!
How to Avoid Rug Pulls in Crypto? (5 Ways Explained)
Christopher Blodgett, an executive at Binance.US, highlighted the dire consequences of the SEC's actions during a deposition in December 2023. According to Blodgett, the imposition of the TRO resulted in a rapid exodus of approximately $1 billion in both crypto and fiat assets from the platform.
This dramatic loss not only affected the company's liquidity but also led to a significant decrease in market trust.
The fallout from these events was severe, with Binance.US experiencing a 75% drop in revenue, prompting the company to lay off 200 employees, or two-thirds of its workforce.
The reduction in staff has limited the exchange's capacity to handle SEC discovery requests, as the remaining employees are overwhelmed with responsibilities.
The situation worsened as banking partners, wary of the regulatory scrutiny, either demanded higher collateral or terminated their relationships entirely. Blodgett further explained:
As a result, our customers were prevented from depositing and withdrawing fiat to the platform, effectively choking the business.
Blodgett's testimony underscored the challenges faced by Binance.US in securing new banking partnerships, describing the company as "radioactive" in the eyes of potential financial allies. Banks fear the repercussions of associating with the exchange, including the threat of receiving subpoenas from the SEC.
Moreover, Binance.US has been grappling with increased operational costs. Legal expenses have soared to $10 million, and auditing costs have surged tenfold.
As Binance.US navigates these turbulent waters, the industry observes its adaptation and recovery efforts after this major setback.
Another update in this legal tussle happened when Changpeng Zhao, the former CEO of Binance, tried to leverage his multibillion-dollar stake in Binance.US for a brief return to the United Arab Emirates.
