Lawsuit Forces Binance to Lay Off Workers and Lose 75% of Its Revenue
Binance is facing a lawsuit from the SEC and may have to pay more than the $4.3 billion it has paid out for illegal trading practices.
The US Securities and Exchange Commission has initiated legal action against cryptocurrency exchange Binance.
This action has resulted in forced layoffs and a 75% drop in revenue, according to a released court document from the proceedings. The US Chief Operating Officer for Binance, Christopher Blodgett, said that the company had to fire more than 200 of its employees. That would be about 67% of its workforce, and these layoffs have been occurring since June of 2023.
The lawsuit against Binance alleges that the exchange platform is guilty of wrongly handling funds from its customers and has offered registered securities, among its misdeeds. According to court documents, the downsizing stems directly from the lawsuit. Now, Binance has far fewer platform partners, losing 15 and leaving it with only five.
Blodget said that the exchange’s revenues drastically decreased since the lawsuit was initiated, falling about 75%. In June, the government regulatory commission has frozen a number of Binance assets and attempted to file a restraining order against Binance.
Binance’s Extensive Legal Problems
There are 13 unique charges included in the lawsuit, with many of them leveled against the company’s founder Changpeng Zhao. The company has been accused of deceiving its customers and is now under intense legal inspection. The scrutiny includes the US subsidiary of Binance BAM, and the two entities are accused of artificially inflating the volume of trades through collusion and illegal trading practices.
Binance has already settled its legal affairs with multiple US federal organizations, including the Treasury Department, Commodity Futures Trading Commission, and the Justice Department. These settlements amounted to about $4.3 billion, and the company may face further settlement costs when the lawsuit from the US Securities and Exchange Commission has been completed.
Binance is currently limited as to what kind of business dealings it can make since many of its assets are frozen. It has halted dealings with several partners as a result, and the future of the company is in serious jeopardy.
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