The Securities and Exchange Commission hit Binance with a massive lawsuit in June of this year, and not long after, the U.S. arm of the leading crypto exchange “imploded,” according to new court documents filed on Tuesday.

In a deposition from December that was released on Tuesday, Binance.US COO Christopher Blodgett revealed that the company has been forced to lay off more than 200 employees, or two-thirds of its workforce, since June as a result of the SEC’s action.

“Our trading volumes and business more generally have imploded,” Blodgett said in the deposition, noting that revenues for the trading platform fell around 75% after the SEC sought a restraining order in June to freeze assets.

‘Web of deception’

In the June lawsuit, the SEC filed 13 charges against Binance, accusing the exchange of mishandling customer funds and offering registered securities, alleging that the company and founder Changpeng Zhao had engaged in an “extensive web of deception.”

The lawsuit targeted not only the global company but also its U.S. arm, which operates under an entity called BAM Trading. In separate legal complaints, both the SEC and the Justice Department claimed Binance.US—which Binance had complained was independent—had engaged in so-called wash trading in collusion with its parent company to artificially inflate volume on the platform.

In November, Binance settled charges with the Justice Department, the Treasury Department, and the Commodity Futures Trading Commission, agreeing to a $4.3 billion settlement, although the SEC was conspicuously absent from the agreement. Binance agreed to a complete exit from the U.S. as part of the settlement, although an official said that BAM Trading was not affected by the agreement.

The SEC lawsuit, which involves broader allegations of fraud, is ongoing, with Binance seeking to dismiss the suit in a motion that was argued before a D.C. federal judge in January.

https://fortune.com/crypto/2024/03/05/binance-us-layoffs-crypto-sec-cz-zhao/

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