Binance.US, the US-incorporated unit of Binance that operates independently from the global parent, laid off two-thirds of its staff, around 200 employees, following the actions of the Securities and Exchange Commission’s (SEC) action last year, Coindesk reported.
In a recently filed court document, the crypto exchange highlighted that $1 billion in assets were moved from the platform following the regulator's temporary restraining order (TRO). The outflow even wiped out 75 percent of the platform revenue, which led to the layoffs.
“In the immediate aftermath of the TRO, we saw somewhere in the neighborhood of $1 billion of assets flee the platform, crypto, and fiat,” Christopher Blodgett, an executive at Binance.US, said in a deposition in December 2023.
Hampering the ‘Discovery’ Process
The SEC filed a lawsuit against Binance, encompassing its global arm and US unit, as well as its former CEO, Changpeng Zhao, last year. The charges included mishandling customer funds and offering unregistered securities. Binance has already settled charges with federal prosecutors and the US commodities regulator, however, the fight against the SEC is still ongoing.
In a recent court filing, the SEC alleged that BAM Trading Services, which is operating as Binance.US, has been “unable or unwilling” to answer the requests on details of customer assets, which is a part of the ‘discovery’ process.
“The SEC believes it is at an impasse with BAM as to certain key questions that BAM has been unable or unwilling to answer, and thus, the Court’s intervention is warranted,” the lawyers of the SEC said.
“Among other things, BAM refused to comply with basic discovery obligations, such as producing attachments and metadata associated with responsive documents or providing written responses.”
A Massive Jump in Costs
Blodgett revealed that the legal costs of the exchange skyrocketed to $10 million, and its auditor expenses jumped ten times. Furthermore, the exchange lost its banking relationships for conversion between crypto and fiat.
“In the immediate wake of the TRO, our banks demanded drastic increases in collateral. But, eventually, they fully terminated the relationship. As a result, our customers were prevented from depositing and withdrawing fiat to the platform, effectively choking the business,” the executive added.
“To banks, we’re radioactive,” he said, as any relationship with Binance.US might lead to SEC subpoenas.
