Sources familiar with the matter said that Binance.US has been laying off employees from the legal, compliance and risk departments.
The latest report from Reuters shows that the US affiliate of crypto exchange Binance (Binance.US) has started firing staff following the lawsuit by the US Securities and Exchange Commission (SEC) last week. Two sources familiar with the matter appraised Reuters of the development on the condition of anonymity.
One source said that nearly 50 people have been laid off ever since the SEC filing on June 5. The sources also added that these are employees from the legal, compliance, and risk departments of Binance.US, who were asked to leave. A spokesperson from Binance.US hasn’t responded to this story related to staff firing yet.
In a message on LinkedIn on Wednesday, June 14, two Binance.US employees stated that they were leaving the company citing the round of layoffs.
On June 5, the SEC accused Binance and its CEO Changpeng Zhao of creating Binance.US to avoid securities laws designed to protect US investors. Binance has stated that it will “vigorously” defend itself against these accusations.
The SEC also filed a lawsuit against BAM Trading, the operating company of Binance.US, claiming that it misled investors regarding the platform’s trading controls, which the SEC alleges were non-existent.
The following day, the SEC requested a federal court to freeze Binance.US’ assets, which include over $2.2 billion in cryptocurrencies and around $377 million in U.S. dollar bank accounts. The SEC expressed concerns that the exchange might transfer these funds overseas. Binance.US responded by calling the request unwarranted and stating that the SEC’s allegations were unjustified.
But in a development earlier this week, the judge ruled out the SEC’s proposal for freezing funds. The judge also added that both parties should reach a common ground amicably, over the issue of handling funds.
Binance.US Market Share Comes Crashing Down
Soon after the SEC lawsuit, the market share for Binance.US has come crashing down as the exchange faces a major shortage of liquidity. As we know, following the SEC lawsuit, Binance had to suspend the USD deposits on the platform and said that it would make a shift toward becoming a crypto-only exchange.
In the documents accessed by CoinDesk, Binance.US has mentioned a ‘very costly litigation process’ as the reason behind the latest layoffs. The documents read:
“As part of this transition, and because of our preparation for a multi-year and very costly litigation process, the Board has asked Management to shrink the size of our teams across the company and reduce our burn rate. Unlike every other US crypto company, we have been working to avoid this scenario, but circumstances have now shifted. This was a very hard decision – one that we didn’t take lightly. We are sad to see our colleagues depart, but we wish them the best and will do what we can to assist them in this transition.”
Read other crypto news on Coinspeaker.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
