- The SEC case against Binance is putting significant pressure on its U.S. business.
- Binance.US has reportedly engaged in layoffs to cover legal costs.
- On the other hand, the firm has beefed up its legal team in preparation for a drawn-out legal battle.
On June 5, the United States Securities and Exchange Commission rocked the crypto industry with an enforcement action against Binance, its U.S. affiliate, and its founder Changpeng “CZ” Zhao.
As both parties gear up for what could be an extended legal battle, the effects on Binance.US’ operations are already becoming apparent. On June 9, the exchange disclosed that it would be switching to a crypto-only model after losing a major banking partner.
The firm has been forced to engage in a round of layoffs in the latest case fallout.
Binance.US Cuts Staff Over Litigation Costs
Binance.US has laid off about 50 members of its staff, per a Reuters report on Thursday, June 15. With 490 employees listed on LinkedIn, the figure represents about 10% of the firm’s workforce.
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Further reports suggest that the move is part of the company’s transition to a crypto-only exchange and geared towards saving costs for a drawn-out legal battle with the SEC.
A Binance spokesperson did not immediately return a request for comment.
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It is worth noting that in the wake of the SEC lawsuit, Binance.US has beefed up its defense team with new hires, including George Canellos, a former SEC enforcement division co-director.
In May, it was reported that Binance, the international arm of the exchange, planned to engage in a round of layoffs in June. The firm did not deny these plans but kicked against the idea that it was part of cost-cutting measures.
The SEC accuses Binance of operating an unregistered securities exchange, mishandling customer deposits, and engaging in wash trading in its complaint. The markets regulator has also moved to freeze assets belonging to Binance.US, but Judge Amy Berman Jackson has urged both parties to compromise.
On the Flipside
- Binance also faces a lawsuit from the Commodity Futures Trading Commission.
Why This Matters
Binance.US moving to lay off about 10% of its staff further underscores the strain the SEC case is having on the crypto exchange’s operations. The firm pushing against a temporary restraining order on its assets argued that it would effectively end its business.
Read this to learn more about Binance’s decision to transition to a crypto-only exchange:
How Binance.US Halting Fiat Withdrawals Affects You
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