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Binance.US Cuts a Third of Staff, Blames SEC Crackdown For Hurting American Jobs

Last Updated September 13, 2023 1:39 PM
James Morales
Last Updated September 13, 2023 1:39 PM
Key Takeaways
  • Binance.US has laid off a third of its staff.
  • The company’s CEO, Brian Shroder, has also stepped down.
  • In a statement, Binance blamed the SEC’s crackdown on the crypto industry.

Between ongoing legal battles and restrictions on its ability to generate income, the future of Binance.US could be in jeopardy as the firm faces challenges on multiple fronts. 

In the latest sign that the crypto exchange is on the back foot, Binance.US shaved a third of its headcount on Wednesday, September 13. Among the departures, CEO Brian Shroder has stepped down.

Binance.US Imposes Second Round of Job Cuts This Year

The latest redundancies represent the second round of job cuts at Binance this year. Back in May, reports circulated that the firm was downsizing its global workforce by around 20%, affecting over 1000 employees.

For Binance.US, the fresh job losses will affect over 100 staff members at the Miami-based firm. Following Shroder’s departure, the latest in an exodus of senior Binance executives, Chief Legal Officer Norman Reed will act as Interim CEO.

American Jobs Threatened by The SEC, Says Binance

In a statement , Binance blamed the recent layoffs on the Securities and Exchange Commission’s (SEC) crackdown on the crypto sector. 

“The SEC’s aggressive attempts to cripple our industry and the resulting impacts on our business have real-world consequences for American jobs and innovation, and this is an unfortunate example of that,” a Binance spokesperson said.

Binance’s assertion that the SEC has put US jobs at risk resonates with recent criticisms levied against SEC chair Gary Gensler by Senate Republicans.

“Your goal should be to fuel competition and innovation,“ remarked Senator Tim Scott. However, “under your leadership, the SEC has failed to implement […] pro-growth rules,” he berated Gensler.

Facing a Hostile SEC, Can Binance Survive in the US?

Binance’s reference to the SEC’s “aggressive” approach to the crypto sector signals the firm’s dissatisfaction with its treatment by the regulator.

In June, the SEC filed a lawsuit against Binance.US, claiming the company deceived investors and misappropriated customers’ funds. On top of the claims of corporate wrongdoing, the SEC complaint names international CEO Changpeng Zhao (CZ) as a defendant.

Shortly after it was sued by the SEC, Binance.US was forced to suspend fiat deposits and withdrawals as banking partners terminated  their relationships with the platform. Since then, it has operated as a crypto-only exchange, facilitating swaps between different cryptocurrencies, but unable to process fiat transactions.

Binance.US has to pay its operational expenses in dollars, which it traditionally earned through fees levied on deposits and withdrawals. Without transaction fees, the firm has no reliable source of fiat income.

As the company prepares for what could be a long and drawn-out legal battle, one has to question the long-term viability of the crypto-only exchange model.

In Wednesday’s statement , a spokesperson said: “The actions we are taking today provide Binance.US with more than seven years of financial runway and enable us to continue to serve our customers while we operate as a crypto-only exchange.”

But there are only so many savings that can be made by laying off staff. Beyond that, the company needs to either regain access to banking services, reimagine its entire business model, or wind down its US operations altogether.

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