April 13, 2024

Binance lays off 1,000 employees amidst SEC lawsuit and DOJ investigation

Binance takes drastic measures: over 1,000 employees laid off amidst SEC lawsuit and DOJ investigation

In a dramatic turn of events, Binance, the largest cryptocurrency exchange globally, has reportedly laid off more than 1,000 employees as it grapples with an ongoing lawsuit filed by the U.S. Securities and Exchange Commission (SEC) and an imminent investigation by the U.S. Department of Justice (DOJ).

According to insider sources cited by The Wall Street Journal, the staff cuts have taken place over recent weeks, potentially reducing Binance’s workforce of approximately 8,000 employees by one-third. Former employees informed the Journal that customer service personnel were disproportionately affected, and the layoffs were implemented on a global scale. While a Binance employee confirmed the layoffs to Fortune, the exact number of affected employees was not disclosed.

Binance, under the leadership of founder and CEO Changpeng Zhao, had previously acknowledged a degree of employee turnover in May, shortly before the SEC filed 13 charges against the exchange and Zhao in early June. However, the scale of the recent layoffs had not been previously reported. Company representatives stated that these actions were undertaken to assess the suitability of talent within critical roles, emphasizing the need for the “right talent and expertise.”

The reported layoffs follow the departure of key executives last Thursday in response to Zhao’s handling of the DOJ investigation. Among those who resigned were general counsel Hon Ng, chief strategy officer Patrick Hillmann, and SVP for compliance Steven Christie. Matthew Price, who oversaw global investigations and intelligence, had left the company earlier.

During midyear performance reviews, Binance management allegedly asked U.S.-based employees if they were willing to relocate to other countries. Those who declined were reportedly terminated, as reported by Bloomberg.

The wave of high-profile exits, coupled with ongoing litigation from U.S. regulators, threatens to plunge the exchange into further turmoil. In March, the Commodities and Futures Trading Commission (CFTC) filed a lawsuit against Binance and Zhao, accusing the company of unlawfully targeting U.S. customers through its international branch, among other allegations.

Subsequently, in June, the SEC launched its own legal action. SEC Chair Gary Gensler stated, “We allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.”

Reports have also emerged regarding a long-running DOJ investigation into Binance and its CEO, with rumors swirling about an impending indictment.

The current developments cast a shadow of uncertainty over Binance, as the exchange contends with legal battles and an internal restructuring. The crypto industry watches closely as the future of one of its major players hangs in the balance.