Binance US CEO Brian Shroder has announced his resignation amid a wave of layoffs. The company is slashing its workforce by a third, letting go of 100 employees.
Brian Shroder’s departure marks the third CEO change for Binance US since its inception in 2019. Catherine Coley, the company’s first CEO and the first woman to lead a major crypto exchange, was replaced in 2021 by Brian Brooks, a former regulator.
Bam Trading (Binance’s U.S. Affiliate) Seeks To Block the U.S. SEC From Deposing its CEO and CFO (Oh, and that CEO Just "Resigned" Amid the Birth of 100 Potential Binance Whistleblowers)
Binance just filed for a protective court order against the U.S. SEC, seeking to limit the… pic.twitter.com/vMxXXSrnQx
— John Reed Stark (@JohnReedStark) September 13, 2023
Brooks lasted just a few months, parting ways over disagreements about the company’s direction with Binance’s global CEO, Changpeng “CZ” Zhao. Shroder took over and led the company through a turbulent regulatory climate, even securing a $200 million funding round that valued Binance US at $4.5 billion.
Regulatory tug-of-war
Despite being set up as an independent entity to serve U.S. customers, Binance.US has been plagued by regulatory issues. The SEC lawsuit accuses Binance and Binance US of bypassing laws intended to protect American investors, adding another layer of complexity to the company’s fraught relationship with regulators.
In a statement, Binance US decried the SEC’s “aggressive attempts to cripple our industry,” noting that such regulatory pressures have “real-world consequences for American jobs and innovation.” A company spokesperson reportedly said,
“The actions we are taking provide Binance US with more than seven years of financial runway and enable us to continue to serve our customers while we operate as a crypto-only exchange. The SEC’s aggressive attempts to cripple our industry and the resulting impacts on our business have real-world consequences for American jobs and innovation, and this is an unfortunate example of that.”
Ripple effects through the crypto industry
The ongoing litigation isn’t just affecting Binance US. Robinhood Markets announced it was delisting certain crypto tokens identified as securities by the SEC in its lawsuit against Binance and a separate action against Coinbase. These developments suggest a ripple effect that could destabilize other actors in the crypto market.
Lawyers for BAM Trading Services, the entity operating Binance US, have pushed back against the SEC’s demands for information, describing them as “overly broad, unduly burdensome”, and out of scope. In a legal filing, they argued that neither Shroder nor CFO Jasmine Lee had unique insights into the custody and transfer of customer assets, a key point of contention in the SEC’s investigation.
An existential threat?
The loss of its CEO and a large chunk of its workforce, coupled with ongoing legal battles, poses what some see as an “existential threat” to Binance.US. According to Clara Medalie, director of research at Kaiko, a digital asset data provider, the current situation is “very serious for Binance.US.”
The exchange has until September 21 to formally respond to the SEC’s allegations, which could be pivotal for the company’s future and the broader crypto market. With regulatory forces closing in and its internal structure shaken, Binance.US stands at a precarious crossroads. Whether it can adapt and thrive under increased scrutiny remains to be seen.
The events unfolding around Binance.US serve as a stern reminder that the largely unregulated frontier of cryptocurrency is coming under closer watch by traditional financial regulators. The actions taken now by Binance.US and how it handles the legal and operational challenges ahead may set a precedent for how the crypto industry navigates a more regulated future.
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