As tensions escalated between the Securities and Exchange Commission (SEC) and cryptocurrency exchange Binance toward the close of last year, the company acknowledged legal violations. Subsequently, Binance and its CEO CZ consented to sanctions, which cast a shadow on the company’s operations, including its American subsidiary. The SEC’s forceful approach demanded significant policy overhauls at Binance.US.
Operational Challenges and Layoffs
Company testimony revealed that the SEC’s actions, which included a Temporary Restraining Order (TRO), severely disrupted Binance.US’s business functions. These measures led to a substantial decline in assets—resulting in a billion-dollar shortfall—and engendered a revenue drop of 75%. Consequently, Binance.US let go of 200 employees, hampering its ability to meet further SEC requirements.
Escalating Costs and Banking Woes
Christopher Blodgett, a prominent Binance.US representative, disclosed during a legal deposition that the exchange’s legal expenses soared to 10 million dollars. He also pointed out the loss of crucial banking partnerships that previously facilitated fiat transactions for customers. Banks, wary of regulatory scrutiny, cut ties with Binance.US, further complicating the platform’s financial operations.
Blodgett stressed the intensity of the predicament Binance.US found itself in, as the platform has since been unable to secure new banking relationships. The company’s reputation, he argued, has become a deterrent for banks fearing regulatory challenges associated with providing services to Binance.US.