Binance’s US arm is reportedly downsizing amid legal challenges with federal securities regulators.
In June, the U.S. Securities and Exchange Commission (SEC) filed 13 charges against Binance and its founder Changpeng Zhao for allegedly selling unregistered securities, misleading investors about security protocols and mishandling customer funds.
Binance.US, which operates under BAM Trading, is also accused of colluding with its parent company to artificially inflate trading volume.
In a deposition released on Tuesday, Binance.US COO Christopher Blodgett says the lawsuit forced the US platform to lay off more than 200 employees, roughly two-thirds of its workforce, according to a new report from Fortune.
Blodgett also notes Binance.US’ revenue fell by around 75% after the SEC filed a motion asking the court to issue a restraining order to freeze the company’s assets. Although the judge turned down the request, the lawsuit still significantly impacted the exchange’s earnings.
Blodgett says the lawsuit and the restraining order were a near-mortal blow to Binance that impaired the firm’s ability to find partners such as banks and market makers.
He says that in the months following the filing of the charges, the number of Binance.US partners fell from more than 20 to less than five. The SEC’s legal action also happened during the bear market, which saw the collapse of FTX exchange and other major industry players.
“Our trading volumes and business more generally have imploded.”
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