Binance.US, the American affiliate of the global cryptocurrency exchange Binance, has been going through a major shake-up in its leadership and workforce, according to multiple sources familiar with the situation. The company’s CEO, Brian Brooks, announced his resignation on August 6, after less than four months on the job. Brooks cited “differences over strategic direction” as the reason for his departure but did not elaborate further.
Since then, Binance.US has reportedly laid off at least a dozen employees across various departments, including compliance, marketing, and product. Some of the affected staff had joined the company only a few weeks or months before being let go, sources said. The layoffs represent a significant portion of Binance US’s total headcount, which was estimated to be around 75 to 100 people before the cuts.
The turmoil at Binance.US comes amid growing regulatory scrutiny and pressure on Binance, the world’s largest crypto exchange by trading volume. Binance has faced investigations, warnings, and restrictions from regulators in several countries, including the UK, Japan, Germany, Singapore, and Canada. The US Securities and Exchange Commission (SEC) is also reportedly probing Binance for possible violations of securities laws.
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Binance.US was launched in September 2019 as a separate entity from Binance, with its own board of directors and management team. The company operates under a licensing agreement with Binance, which allows it to use the latter’s technology and brand name. Binance.US is registered as a money services business with the Financial Crimes Enforcement Network (FinCEN), but it does not have a federal banking charter or a BitLicense from New York State.
One of the main issues that Binance.US has to deal with is the regulatory uncertainty in the US market. The exchange has been under scrutiny from various authorities, such as the Commodity Futures Trading Commission (CFTC), the Securities and Exchange Commission (SEC), and the Department of Justice (DOJ), for allegedly violating securities laws, facilitating money laundering, and operating without proper licenses. Binance.US has also been banned or restricted in several states, such as New York, Texas, and Florida, limiting its customer base and revenue potential.
Another problem that Binance.US faces is the lack of liquidity and trading volume. According to CoinMarketCap, Binance.US ranks 58th among global exchanges by adjusted volume, with a daily average of $116 million as of September 15, 2021. This is a far cry from its parent company, Binance, which ranks first with a daily average of $24 billion. The low liquidity and volume make it harder for Binance.US to attract and retain customers, especially institutional investors who demand high-speed execution and deep order books.
A third challenge that Binance.US has to overcome is the competition from other US-based exchanges, such as Coinbase, Kraken, and Gemini. These exchanges have a more established reputation, a wider range of products and services, and a stronger compliance record in the US market. They also have more resources and partnerships to expand their market share and customer base. For example, Coinbase recently became the first crypto exchange to go public on Nasdaq, raising $4.3 billion in its initial public offering (IPO). Kraken is also reportedly planning to go public in 2022, following a similar route as Coinbase.
All these factors have led some experts to question the viability of Binance.US and its ability to survive in the long term. According to a report by Bloomberg, Binance.US is losing money every month and is struggling to find investors or partners to support its operations. The report also claims that Binance.US has been trying to distance itself from its parent company, Binance, which has been accused of being involved in illegal activities and evading regulations around the world. However, this strategy may not be enough to convince regulators and customers that Binance.US is a trustworthy and reliable platform.
Binance.US is facing a tough situation that may jeopardize its future. The exchange has to deal with regulatory hurdles, low liquidity and volume, and fierce competition from other US-based platforms. Unless it can find a way to resolve these issues and improve its performance, it may be edging unto insolvency.
Binance.US has been trying to expand its presence and legitimacy in the US market, by applying for licenses in various states, partnering with local banks and payment processors, and adding more coins and features to its platform. However, sources said that the company has faced challenges in hiring and retaining talent, securing funding and liquidity, and navigating the complex and evolving regulatory landscape.
It is unclear who will replace Brooks as the CEO of Binance.US, or what the company’s future strategy will be. A spokesperson for Binance.US declined to comment on the personnel changes or the regulatory issues. In a statement on August 6, the company said that it “remains committed to serving our customers and expanding our products and services in line with our regulatory obligations.”