Binance.US Suffered Massive Layoffs and Revenue Loss Following SEC Lawsuit
A recent court deposition has shed light on the impact of the Securities and Exchange Commission’s (SEC) lawsuit against crypto exchange Binance.US in June 2023.
Christopher Blodgett, a Binance.US executive, testified that the company experienced a 75% loss in revenue and was forced to lay off 200 employees, which is two-thirds of its workforce.
Key points:
- Binance.US lost $1 billion in assets following the SEC’s temporary restraining order.
- The exchange experienced a 75% loss in revenue and laid off 200 employees (two-thirds of its workforce).
- Legal costs skyrocketed to $10 million, and auditor expenses increased by “10x.”
- The exchange lost banking relationships, preventing customers from depositing and withdrawing funds.
According to Blodgett’s December 2023 deposition, the exchange saw approximately $1 billion in crypto and fiat assets leave the platform immediately following the Temporary Restraining Order (TRO).
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This mass exodus of funds dealt a severe blow to the U.S.-incorporated arm of Binance. This led to a significant reduction in headcount, straining the company’s ability to respond to discovery requests from the SEC.
Legal costs of Binance surged to $10 million
In addition to the loss of revenue and workforce, Blodgett testified that Binance.US’ legal costs soared to $10 million, and its auditor expenses increased tenfold.
The exchange also lost crucial banking relationships. “In the immediate wake of the TRO, our banks demanded drastic increases in collateral. But eventually, they fully terminated the relationship,” Blodgett stated.
Read more: SEC Files Cease-And-Desist Order Against ShapeShift, Agrees To Pay $275,000
Since the SEC’s action, Binance.US has struggled to find new banking partners willing to work with the exchange. Blodgett lamented, “To banks, we’re radioactive. Who can blame them? The second it becomes known that they’re working with Binance.US, they can reasonably expect a nasty subpoena from the SEC.”
The revelations from Blodgett’s deposition underscore the consequences of the SEC’s lawsuit against Binance.US and its founder, Changpeng Zhao.
