Binance.US says it’s ‘radioactive’ to banks, SEC dealt ‘near-mortal blow’

Jesse Coghlan3 hours agoBinance.US says it’s ‘radioactive’ to banks, SEC dealt ‘near-mortal blow’A deposition from Binance.US’ chief operating officer claims the SEC’s suit last year caused banks to pull support from the exchange, “effectively choking the business.”1352 Total views1 Total sharesListen to article 0:00NewsOwn this piece of crypto historyCollect this article as NFTJoin us on social networksBinance.US was dealt a “near-mortal blow” after a June lawsuit from the United States Securities and Exchange Commission, forcing it to terminate over 200 staff as revenues “imploded,” according to an executive at the firm. 

“To banks, we’re radioactive,” Binance.US chief operating officer Christopher Blodgett said in a December deposition shared in a March 5 court filing in the SEC’s case against the U.S. arm of crypto exchange Binance.

“Who can blame them? Because the second it becomes known that they’re working with Binance.US, they can reasonably expect a nasty subpoena from the SEC,” he said.

Last year in June, the SEC charged Binance, Binance.US and founder Changpeng “CZ” Zhao with selling unregistered securities, among other allegations.

Blodgett said the exchange’s customers have been unable to transact in U.S. dollars after its banking partners pulled support, and Blodgett said it can’t find new ones — “effectively choking the business.”

After the SEC’s action, Binance.US immediately saw around “$1 billion of assets flee the platform” and later had to “terminate in excess of 200 people” — over two-thirds of the company — after its revenue “imploded on the order of 75 percent-plus,” Blodgett said.A highlighted excerpt from Blodgett’s deposition transcript where he claimed customer reviews cite the SEC’s lawsuit. Source: CourtListener

Institutional trust was also eroded. The exchange had less than five market makers compared to the more than 20 it had before the lawsuit, said Blodgett.“At the highest level, it’s dealt a near-mortal blow.”

The SEC charged Binance, Binance.US and Zhao with selling unregistered securities, engaging in wash trading to inflate its volumes and claimed the exchange’s user funds were commingled in an account at the Zhao-tied Merit Peak.

Related:SEC claims Binance.US ‘unwilling’ to give info, requests court intervenes

The day after the suit, the SEC filed a temporary restraining order (TRO) to freeze Binance.US’ assets over concerns it would transfer customer funds offshore, which a judge dismissed.

Binance, Binance.US and Zhao admitted to violating money laundering and terrorism financing laws and settled with the Department of Justice, Treasury and the Commodity Futures Trading Commission for $4.3 billion in November.

The SEC, however, is sticking with its charges and is still digging for evidence in its case against the exchange.

Zhao pleaded guilty to a money laundering charge with a sentencing hearing on April 3. He faces up to 18 months in prison.

Magazine: Deposit risk: What do crypto exchanges really do with your money?# Business# SEC# Changpeng Zhao# Court# Binance# Exchanges# RegulationAdd reactionAdd reaction