Binance.US experienced a significant setback in its revenue, with a reported 75% decline following legal actions from the U.S. Securities and Exchange Commission (SEC). This revelation came to light through a deposition filed in December 2023 by Chief Operations Officer Christopher Blodgett. Blodgett cited the issuance of a Temporary Restraining Order (TRO) by the SEC, which led to a freeze on Binance.US operations and resulted in substantial asset outflows totaling around $1 billion, encompassing both cryptocurrency and fiat assets.
The aftermath of the TRO also prompted a substantial reduction in workforce, with approximately 200 layoffs, representing two-thirds of Binance.US’s staff. This situation not only impacted the exchange’s revenue but also hindered its ability to comply with discovery requests from the SEC. The discovery process, integral to the U.S. legal system, allows plaintiffs to request pertinent documents from the defendant, such as financial records and correspondence.
Blodgett further elaborated on the financial strain caused by the legal proceedings, noting a significant increase in legal expenses, with the legal budget soaring to $10 million. Additionally, auditor expenses surged by tenfold as critical partnerships dissolved due to the fallout. The situation was exacerbated by the termination of banking relationships, resulting in restrictions on fiat deposits and withdrawals, effectively choking off a vital aspect of the exchange’s operations.
Furthermore, Binance faced operational challenges, such as the suspension of withdrawals for Solana cryptocurrency due to increased transaction volumes. While the exchange pledged to address these issues with long-term solutions, concerns lingered among users regarding fund security amid reports of arbitrary fund confiscations and account withdrawal freezes on other exchanges like MEXC.