Facing accusations of violating securities laws from U.S. regulators, Binance.US, the American subsidiary of crypto behemoth Binance, has reportedly conducted a wave of layoffs. According to insiders and social media posts from employees, the layoffs come in response to the regulators’ charge and subsequent move to freeze the company’s assets.
While one source estimated the number of affected staff to be approximately 50, Reuters was unable to independently verify the figure or the seniority of the employees impacted. The firm’s spokesperson has yet to comment on the matter. Those reportedly dismissed primarily belong to the legal, compliance, and risk departments.
On June 5, the Securities and Exchange Commission (SEC) alleged Binance and its founder and CEO, Changpeng Zhao, of contriving Binance.US as a means to circumvent U.S. securities laws designed to safeguard American investors. The company responded with a commitment to vigorously defend itself. The SEC also brought a suit against BAM Trading, the operational entity behind Binance.US, accusing it of misleading investors about non-existent trading controls on its platform.
The next day, the SEC requested a federal court to freeze Binance.US’ assets, including over $2.2 billion in cryptocurrency and about $377 million in U.S. dollar bank accounts, over concerns that the funds could be transferred offshore. Binance.US has labeled the move as unwarranted and the allegations as baseless.
The CEO of Binance.US, Brian Shroder, noted in a communication to staff that the ongoing legal ordeal necessitated cost-cutting and organizational streamlining to maintain long-term viability. Two employees took to LinkedIn to confirm their exit from the company, with one attributing it to the layoffs.
Binance.US also alerted that its banking partners may cease dollar withdrawals as early as June 13, in light of the SEC’s hardline stance. Customers were encouraged to withdraw their funds, as the firm seeks to transition into a crypto-only exchange.
Despite avoiding layoffs in the past year, Shroder admitted that the actions of the SEC and their banking partners necessitated a change in approach. According to a court filing, BAM Trading argued that the SEC’s asset freeze request could effectively render the company inoperable, as it would be unable to meet its financial obligations and maintain its technological platform.
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