Binance.US suffered severe consequences following a June lawsuit from the U.S. Securities and Exchange Commission (SEC), leading to the termination of over 200 employees as revenues plummeted. Christopher Blodgett, the firm’s chief operating officer, described the situation as a “near-mortal blow,” with revenues collapsing.
Blodgett highlighted the damaging impact on Binance.US’s reputation within the banking sector, labeling the company as “radioactive.” Banking partners withdrew support, leaving customers unable to transact in U.S. dollars, and finding new banking partners became an insurmountable challenge, severely affecting the business.
Following the SEC’s actions, Binance.US witnessed approximately $1 billion in assets fleeing the platform. The loss of trust among institutional investors was evident, as the exchange saw a significant reduction in market makers, dropping from over 20 to less than five.
The SEC charged Binance, Binance.US, and founder Changpeng Zhao with various violations, including selling unregistered securities and engaging in wash trading. Despite admitting to violations of money laundering and terrorism financing laws, and settling with multiple regulatory bodies for $4.3 billion in November, the SEC continues its pursuit of evidence against the exchange.
The legal battle persists, with the SEC maintaining its charges against Binance and Zhao. Zhao pleaded guilty to a money laundering charge, with a sentencing hearing scheduled for April 3, potentially facing up to 18 months in prison.
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