Binance, a leading cryptocurrency exchange, has asked Binance.US management to reduce the size of its workforce across the division as it foresees protracted and expensive litigation with the US Securities and Exchange Commission (SEC). In a letter to employees, Binance warned that the litigation with the SEC is likely to be lengthy and costly. The decision is expected to affect approximately 50 employees. A Bloomberg report confirmed that a number of employees at Binance’s US affiliate have been laid off. Although the exact number of affected employees was not mentioned, a Reuters report stated that about 50 staff members have been affected.
Background on Binance.US and Recent Developments
Binance.US, which serves only American customers, has faced a series of challenges in recent months. Earlier this month, the crypto exchange announced that it was being cut off from banking and payments partners. On June 9, it suspended USD deposits and asked users to withdraw their dollar deposits immediately, citing the SEC’s “extremely aggressive and intimidating tactics.” Meanwhile, Binance CEO Changpeng Zhao dismissed rumors on social media that the company sold BTC and BNB, asserting that the firm even holds its “bag of FTT.”
In a lawsuit filed on June 5, the SEC requested the court to freeze the assets and operations of Binance.US. However, the motion was denied on June 14, and the court asked Binance.US and the agency to engage with each other and find a solution. The recent developments indicate that the sudden hardening of US regulators’ stance following the collapse of FTX in November 2022 has finally caught up with the industry’s top players. The SEC filed lawsuits against Binance and Coinbase on June 5 and June 6, respectively, accusing them of functioning as exchanges, broker-dealers, and clearing houses without proper licenses. It charged Binance with running two unregistered securities – BNB and BUSD – and commingling customers’ funds. The SEC argued that Binance and Coinbase allow trading in crypto tokens, which are unregistered securities.
Implications of the Job Cuts and Litigation with SEC
The job cuts at Binance.US indicate the impact of the ongoing legal battle with the SEC on the company. While Binance has requested Binance.US to reduce the size of its workforce, the exact number of employees affected by the decision remains unclear. The litigation with the SEC is expected to be costly and prolonged, and Binance is likely to face more challenges in the coming months. These developments highlight the need for cryptocurrency exchanges to comply with regulations and obtain proper licenses to avoid legal issues. As the industry continues to evolve, regulatory compliance will become increasingly important for players in the cryptocurrency market to operate effectively and avoid legal challenges.