Binance.US stated that its company’s relationship with banks had been “radioactive,” adding that the SEC had dealt “a near-mortal blow” to the crypto industry.
During a deposition, Binance.US’s chief operating officer stated that the SEC’s lawsuit had a “chilling effect” on the company’s banking relationships, severely affecting its business operations.
An executive from Binance.US revealed that the SEC lawsuit caused a “near-mortal blow” to the company, forcing it to lay off over 200 employees as revenues “imploded.”
According to Binance.US’s COO, Christopher Blodgett, banks perceived the company as “radioactive,” making it difficult to maintain banking relationships.
“Who can blame them? Because the second it becomes known that they’re working with Binance.US, they can reasonably expect a nasty subpoena from the SEC,” he said.
In June of last year, the SEC accused Binance, Binance.US, and Changpeng Zhao of offering and selling unregistered securities.
Blodgett mentioned that Binance.US’s banking partners terminated their relationships with the exchange, making it difficult for the exchange’s customers to transact in U.S. dollars and harming the company’s revenues.
Blodgett further explained that in the aftermath of the SEC’s action, Binance.US witnessed around $1 billion in assets withdrawn from the platform and was compelled to lay off over two-thirds of its staff after its revenues decreased by over 75%.
He added that the company had only five market makers remaining, compared to the more than 20 it had before the lawsuit, indicating that the lawsuit damaged Binance.US’s relationships with market makers and other institutional partners.
“At the highest level, it’s dealt a near-mortal blow.”
The SEC alleged that Binance, Binance.US, and Zhao had offered and sold unregistered securities, engaged in wash trading, and co-mingled user funds with the affiliated entity Merit Peak.
The day after filing the suit, the SEC sought a temporary restraining order to freeze Binance.US’s assets, citing concerns that the exchange would move customer funds overseas. However, a judge dismissed the request for the Temporary Restraining Order.
In November, the Department of Justice, the Treasury, and the Commodity Futures Trading Commission settled with Binance, Binance.US, and Zhao, with the three entities paying $4.3 billion for violations of money laundering and terrorism financing laws.
The SEC continues to pursue its charges against Binance.US and is seeking additional evidence to support its case.
Zhao pleaded guilty to a money laundering charge and is facing up to 18 months in prison. He is scheduled to be sentenced on April 3.
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