The world’s largest crypto exchange has reportedly laid off more than 1,000 employees amid a blockbuster lawsuit from the Securities and Exchange Commission as well as impending enforcement actions from the U.S. Justice Department.
The cuts have happened over recent weeks, according to a source who spoke to The Wall Street Journal, and could end up reducing Binance’s staff of approximately 8,000 by one-third. Customer service employees were disproportionately affected, former employees told the Journal, and the layoffs were distributed globally. An employee at the company confirmed to Fortune that there had been layoffs but didn’t specify the exact number.
The exchange, headed by founder and CEO Changpeng Zhao, had previously acknowledged a churn of employees in May, shortly before the SEC filed 13 charges against Binance and Zhao in early June. But the scale of the layoffs hadn’t been previously reported, and company representatives claimed the moves were simply a way to ensure “whether we have the right talent.”
A spokesperson for Binance resent the same company statement issued when reports of the layoffs first became public. “This is not a case of rightsizing, but rather, reevaluating whether we have the right talent and expertise in critical roles,” he wrote.
The reported cuts follow the departure of key executives last Thursday in response to Zhao’s handling of the Justice Department’s investigation into him and the exchange. Executives who tendered their resignation included general counsel Hon Ng, chief strategy officer Patrick Hillmann, and SVP for compliance Steven Christie. Matthew Price, who oversaw global investigations and intelligence, had left earlier.
And during midyear performance reviews, management reportedly asked U.S.-based employees whether they would be willing to relocate to other countries. Those who said they wouldn’t were let go, according to Bloomberg.
The spate of exits could push the exchange into further chaos as it grapples with a flurry of litigation from U.S. regulators. In March, the Commodities and Futures Trading Commission sued Binance and Zhao, alleging, among other accusations, that the firm illegally and intentionally courted U.S. customers for its international branch.
In June, the SEC followed suit. “We allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law,” SEC Chair Gary Gensler said in a statement.
And since then, rumors of an impending indictment against Binance and Zhao have swirled, amid reports of a long-running Justice Department investigation into the firm and its founder and CEO.
