SEC Checks Binance US: Job Cuts and Legal Troubles Ahead
Binance US faces SEC probe, cutting staff amid asset handling concerns
The conflict between Binance.US and the US Securities and Exchange Commission (SEC) is heating up as the SEC tightens its examination of the crypto exchange's practices, especially regarding the handling of American customers' assets. This situation has cast a shadow over Binance Holdings and its US branch, BAM Trading Services, operating as Binance.US, highlighting the growing tensions in the crypto regulatory landscape. The SEC has launched a lawsuit against Binance.US, scrutinizing its management of US customer funds and the role of non-US employees in this process. Despite a court order demanding Binance.US to prove its control over customer assets, the SEC has struggled to get all the information it needs, suggesting potential non-compliance issues.
In defense, Binance.US has insisted on its compliance and cooperation with the SEC, despite the agency's skepticism about the exchange's control over customer assets and potential external access by Binance Holdings staff through third-party servers. This dispute has exposed vulnerabilities in Binance.US's claimed exclusive control over customer assets and keys amidst a strong crypto market. The SEC's efforts to temporarily shut down Binance US operations last year had a dramatic impact, leading to a significant asset withdrawal of $1 billion and a 75% revenue drop. This led to Binance.US reducing its staff by two-thirds, highlighting the tough financial and operational challenges it faces.
Rising legal and auditing expenses, now totaling $10 million and increasing tenfold, along with damaged banking relationships, have complicated customer transactions from digital to fiat currencies. This financial strain has made it challenging for Binance.US to respond to the SEC's requests with a reduced workforce. This ongoing struggle reflects the broader issues of regulatory compliance in the crypto industry, as Binance.US navigates these hurdles. The situation emphasizes the complexity of aligning crypto operations with regulatory standards, with significant implications for the industry and investor security.
