Binance.US, the American arm of the cryptocurrency exchange Binance, has reportedly laid off 50 employees across its legal, compliance and risk departments, according to sources cited by Reuters.
LinkedIn posts from two Binance.US employees confirmed their departures, with one mentioning a “round of layoffs.”
The news came amid legal challenges faced by the company. The U.S. Securities and Exchange Commission (SEC) had earlier charged Binance and its CEO Changpeng “CZ” Zhao on June 5, accusing them of using Binance.US to evade regulations safeguarding U.S. investors.
The SEC also accused BAM Trading, the operational firm behind Binance.US, of misleading investors by providing false information about non-existent trading restrictions on its platform.
Seeking further action, the SEC has petitioned a federal court to seize Binance.US’ assets, including over $2.2 billion in cryptocurrency and $377 million in bank accounts. The regulatory body expressed concerns that these funds could be moved overseas.
A key point of contention, in this case, revolves around the definition of “security.” In February, SEC Chairman Gary Gensler suggested that, except for Bitcoin, all cryptocurrencies should be considered securities subject to SEC oversight.
However, the crypto community and industry professionals have criticized this stance, with the Commodities and Futures Trade Commission (CFTC) showing a contrasting opinion.
Analysts note that Binance may attempt to leverage the lack of consensus between the two agencies to its advantage in the ongoing struggle with the SEC. The community argues that the SEC’s reasoning behind classifying cryptocurrencies as securities is too ambiguous, particularly in the debate over whether Ethereum should be classified as a commodity or a security.
In March, Gensler said that Ethereum’s use of Proof-of-Stake (PoS) technology aligns with securities regulations. However, during his congressional hearing a month later, he declined to confirm whether Ethereum should be considered a security.
In other news, Binance.US has reportedly hired former SEC enforcement Co-director George Canellos, currently associated with the law firm Milbank LLP, to join the legal team along with three other lawyers.
According to former SEC Internet Enforcement Chief John Reed Stark on Twitter, Binance is actively hiring top defense attorneys in anticipation of potential criminal prosecution.
“Given the gravity of the fraud alleged by the CFTC and SEC (which might also be the tip of the iceberg of any criminal indictment), a DOJ [Department of Justice] prosecutor would certainly seek prison time for anyone convicted or pleading guilty to Binance-related crimes,” Stark said.
The SEC made similar accusations against Binance and Coinbase and sought to freeze Binance.US’ assets with a temporary restraining order.
“If the Court does address the merits of the SEC’s motion, it should deny that motion,” said Binance.US.
“The SEC’s proposed remedies would effectively end [Binance.US’] business. The SEC seeks, among many other things, a draconian and unduly burdensome freeze of all the company’s operations without any exceptions.”
On June 12, Representative Warren Davidson introduced a bill proposing a commission restructuring and calling for the removal of Gensler, citing concerns about the commission’s current heavy-handed approach to crypto regulation.
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