"The allegations of the SEC severely undermined institutional trust in our platform," Binance.US executive Christopher Blodgett said during a deposition.
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After the SEC’s action, Binance.US saw a $1 billion asset exodus, a 75% revenue drop, and 200 layoffs.
The exchange struggles with legal costs, auditor expenses, and lost banking relationships, impacting operations.
The Securities and Exchange Commission’s (SEC) effort last year to freeze Binance.US’ operations via a Temporary Restraining Order (TRO) led to mass layoffs at the company as revenue imploded and it struggled with market trust, one of its executives said during a court deposition.
“In the immediate aftermath of the TRO, we saw somewhere in the neighborhood of $1 billion of assets flee the platform, crypto, and fiat,” Christopher Blodgett, a Binance.US executive, said during a December 2023 deposition that was recently published as part of a status update on the SEC-Binance lawsuit.
This loss of $1 billion in assets led to a 75% loss in revenue and 200 layoffs – two-thirds of its workforce – at the U.S.-incorporated arm of Binance. This reduction in headcount has impacted the exchange’s ability to respond to discovery requests from the SEC because teams are stretched thin.
Blodgett also said that the exchange’s legal costs skyrocketed to $10 million, and its auditor expenses have increased by “10x” in addition to the loss of banking relationships, which allowed customers to withdraw their digital assets into fiat.
“In the immediate wake of the TRO, our banks demanded drastic increases in collateral. But eventually, they fully terminated the relationship. As a result, our customers were prevented from depositing and withdrawing fiat to the platform, effectively choking the business,” he said.
Since then, the exchange has been unable to find new banking partners to work with it, Blodgett testified.
“To banks, we’re radioactive,” he said. Who can blame them? The second it becomes known that they’re working with Binance.US, they can reasonably expect a nasty subpoena from the SEC.”
Edited by Pariksh*t Mishra.
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