Binance US laid off 2/3 of staff in wake of SEC lawsuit, revenue plunged 75% after ‘near-mortal blow’
The Securities and Exchange Commission hit Binance with a massive lawsuit in June of this year, and not long after, the U.S. arm of the leading crypto exchange "imploded," according to new court documents filed on Tuesday.
In a deposition from December that was released on Tuesday, Binance.US COO Christopher Blodgett revealed that the company has been forced to lay off more than 200 employees, or two-thirds of its workforce, since June as a result of the SEC's action.
"Our trading volumes and business more generally have imploded," Blodgett said in the deposition, noting that revenues for the trading platform fell around 75% after the SEC sought a restraining order in June to freeze assets.
'Web of deception'
In the June lawsuit, the SEC filed 13 charges against Binance, accusing the exchange of mishandling customer funds and offering registered securities, alleging that the company and founder Changpeng Zhao had engaged in an "extensive web of deception."
The lawsuit targeted not only the global company but also its U.S. arm, which operates under an entity called BAM Trading. In separate legal complaints, both the SEC and the Justice Department claimed Binance.US—which Binance had complained was independent—had engaged in so-called wash trading in collusion with its parent company to artificially inflate volume on the platform.
In November, Binance settled charges with the Justice Department, the Treasury Department, and the Commodity Futures Trading Commission, agreeing to a $4.3 billion settlement, although the SEC was conspicuously absent from the agreement. Binance agreed to a complete exit from the U.S. as part of the settlement, although an official said that BAM Trading was not affected by the agreement.
The SEC lawsuit, which involves broader allegations of fraud, is ongoing, with Binance seeking to dismiss the suit in a motion that was argued before a D.C. federal judge in January.
As part of the SEC's enforcement action, it took the extraordinary step of seeking to freeze the U.S. trading platform's assets, arguing that Zhao could remove the funds from the exchange. A judge rebuffed the request in June, although it still significantly hurt Binance.US's business, according to Blodgett's deposition.
In the filing, he described the lawsuit and restraining order as a "near-mortal blow," impairing the platform's ability to find partners, including banks and market makers, which reduced from more than 20 to less than five in the months following the lawsuit. In August, Binance.US turned to the crypto startup MoonPay as an alternative way for users to convert dollars to crypto after losing its banking partners. The downturn coincided with broader chills throughout the crypto market, with trading and prices sharply decreasing after the collapse of high-profile companies like FTX in 2022.
Binance.US previously reported that it had laid off 100 staff in September, with CEO Brian Shroder leaving the company. A sentencing hearing for Zhao related to the DOJ settlement has been scheduled for April.
A spokesperson did not immediately respond to a request for comment.
This story was originally featured on Fortune.com
