Binance.US suffered a severe blow in June when it was sued by the United States Securities and Exchange Commission (SEC), leading to the termination of over 200 employees and a significant decline in revenues, according to a company executive.
In a court filing on March 5, Binance.US Chief Operating Officer Christopher Blodgett stated that the company has become “radioactive” to banks due to its legal battle with the SEC. He explained that banks fear working with Binance.US because they could potentially face subpoenas from the SEC.
The SEC charged Binance, Binance.US, and founder Changpeng “CZ” Zhao in June of last year for selling unregistered securities and other alleged violations. As a result, Binance.US lost support from its banking partners, preventing its customers from transacting in U.S. dollars. Blodgett also mentioned that the company has been unable to find new banking partners, which has severely impacted its operations.
Following the SEC’s legal action, Binance.US experienced a significant outflow of assets, with approximately $1 billion leaving the platform. This forced the company to lay off over 200 employees, which accounted for more than two-thirds of its workforce. Additionally, the company’s revenue dropped by over 75%.
Blodgett further revealed that institutional trust in Binance.US was severely damaged. The number of market makers on the platform decreased to less than five, compared to the previous figure of over 20.
The SEC’s charges against Binance, Binance.US, and Zhao include selling unregistered securities, engaging in wash trading to inflate trading volumes, and commingling user funds in an account at Merit Peak, which is associated with Zhao.
After the SEC filed the lawsuit, they also sought a temporary restraining order to freeze Binance.US’ assets, citing concerns that customer funds would be transferred offshore. However, a judge dismissed the order.
In November, Binance, Binance.US, and Zhao settled with the Department of Justice, Treasury, and the Commodity Futures Trading Commission for $4.3 billion, admitting to violating money laundering and terrorism financing laws. Despite this settlement, the SEC is continuing its investigation and gathering evidence for its case against the exchange.
Zhao pleaded guilty to a money laundering charge, and his sentencing hearing is scheduled for April 3, where he faces a maximum sentence of 18 months in prison.