Binance.US lost three-quarters of its revenue after the SEC sued it, according to a new legal filing of a deposition in December 2023 by Chief Operations Officer Christopher Blodgett.
“Our trading volumes and business more generally have imploded,” said Blodgett after the SEC froze Binance.US’ operations via a Temporary Restraining Order (TRO).
“In the immediate aftermath of the TRO, we saw somewhere in the neighborhood of $1 billion of assets flee the platform, crypto, and fiat” said Blodgett, explaining that these losses led to a 75% decline in revenue and 200 layoffs, roughly two-thirds of the workforce of the US-servicing arm of the global Binance.
It also hindered the exchange team’s ability to meet discovery requests by the SEC. In the US legal system, discovery is a process whereby plaintiffs can request documents like financial statements or correspondence from the sued party.
As a result, the exchange’s legal budget has hit $10 million, according to Blodgett, and auditor expenses increased “10x” as key partnerships dissolved:
“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,” Blodgett said.
“To banks, we’re radioactive.”
He added: “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.”
Yesterday, Binance announced it suspended withdrawals to Solana because of an “increased volume of transactions.”
In an accompanying press release, the exchange said it has seen “some areas for optimization” and is working to implement a “long-term solution” on March 9 at 18:00 (UTC).
Solana suffered a pretty major five-hour outage back on February 6, however, if is not currently clear whether Binance’s decision to halt withdrawals has anything to do with Solana’s service.
Meanwhile, users of another popular centralized exchange, MEXC, are anxious about their funds this week after growing reports that the exchange arbitrarily confiscates funds and freezes account withdrawals.
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