In the final period of last year, the situation between the SEC and Binance became increasingly tense, and the relationship between the institution and the exchange was strained. Eventually, Binance and CZ admitted their guilt and reached an agreement on paying fines. This incident occurred not only on the global side of Binance but also affected Binance.US. The SEC exerted significant pressure on Binance.US, leading to major changes in the company’s policies.
Incidents at Binance.US
According to testimony from a company executive in court, the Securities and Exchange Commission (SEC) attempted to freeze Binance.US’s operations last year through a Temporary Restraining Order (TRO). This effort resulted in the company having to lay off staff due to decreased revenue and struggles with market confidence.
One of the leading spokespeople for Binance.US, Christopher Blodgett, stated during a deposition in December 2023 as part of the updates in the SEC-Binance case:
Immediately following the TRO, we saw an exodus of assets from the platform, in crypto and fiat, amounting to 1 billion dollars.
This loss of assets, which amounted to a 1 billion dollar deficit, triggered a 75% revenue loss for Binance’s US branch and resulted in the layoff of 200 employees. The reduction in staff numbers negatively affected the exchange’s ability to respond to the SEC’s successive demands.
Increased Expenses at Binance.US
Company official Blodgett also mentioned that during the same period, the exchange’s legal costs reached 10 million dollars. Additionally, he noted the loss of banking relationships that allowed customers to convert and withdraw digital assets to fiat, as well as a “tenfold” increase in expenses related to auditors.
Right after the TRO, our banks demanded significant increases in collateral. However, they eventually terminated the relationship altogether. As a result, our customers were blocked from depositing and withdrawing fiat on the platform, effectively choking the business.
Blodgett highlighted the severity of the situation, noting that since the events, the exchange has struggled and even failed to find new banking partners willing to work with them, adding:
We are in a radioactive situation for banks. Who can blame them? The moment it’s known they work with Binance.US, they can expect a nasty court subpoena from the SEC.
