Binance.US, the American subsidiary of the global cryptocurrency exchange Binance, has been forced to cut two-thirds of its workforce as it grapples with a dramatic downturn in revenue, following a lawsuit from the Securities and Exchange Commission (SEC). During a deposition, Binance.US executive Christopher Blodgett revealed the profound impact of the SEC’s legal actions on the platform’s stability and trust among institutional investors.
A Severe Blow to Operations
The SEC’s move to temporarily restrict Binance.US operations with a Temporary Restraining Order (TRO) led to a staggering $1 billion withdrawal of assets from the platform, comprising both cryptocurrency and fiat currencies. This exodus resulted in a 75% plunge in revenue, prompting the company to lay off 200 employees—a significant reduction that constitutes two-thirds of its workforce.
Legal and Operational Hurdles
The deposition highlighted the exchange’s struggle with increased legal and auditing expenses, which have substantially risen in the wake of the SEC’s lawsuit. Legal costs alone have soared to $10 million, while auditing expenses have seen a tenfold increase. Additionally, the loss of banking relationships has severely hampered Binance.US’s operations, making it difficult for customers to deposit or withdraw fiat currency, effectively crippling the platform’s liquidity.
The Challenge of Banking Partnerships
In the aftermath of the TRO, banks demanded higher collateral from Binance.US before ultimately severing ties with the exchange. This action has left the company in a challenging position, as it struggles to establish new banking partnerships to facilitate fiat transactions for its customers. The inability to secure these essential relationships further complicates the platform’s efforts to recover and stabilize in the face of ongoing legal challenges.
