In the wake of mounting regulatory pressure, Binance.US, the American arm of the global cryptocurrency exchange Binance, is seeing yet another wave of high-profile departures.
The most recent exits include Krishna Juvvadi, the company’s legal director, and Sidney Majalya, its chief risk officer, according to insider sources cited by The Wall Street Journal.
This news comes hot on the heels of the abrupt departure of Binance.US’s former president, Brian Shroder, and a significant reduction in the workforce as the exchange reels from a legal onslaught initiated by the U.S. Securities and Exchange Commission (SEC).
The SEC filed a lawsuit against Binance and its CEO, Changpeng Zhao (CZ), in June, leveling 13 charges, including operating as an unregistered exchange and attempts to evade U.S. securities laws.
This legal battle has strained Binance.US’s relationships with banking partners, causing disruptions in U.S. dollar deposits and withdrawals. The exchange has publicly criticized the SEC’s tactics, describing them as “unreasonable” and “unduly burdensome.”
In a separate lawsuit, the Commodity Futures Trading Commission accused Binance of violating trading and derivatives rules. The exchange has also experienced a string of executive departures and layoffs.
Binance.US’s Troubles with SEC Probe
The most recent setback for Binance.US involves its alleged non-cooperation with the SEC in an ongoing probe. The SEC contends that the exchange’s staking, clearing, and brokerage services violate federal securities law.
Federal regulators are particularly concerned about Binance.US’s use of Ceffu, a custody service provided by Binance’s international arm, which could potentially allow other entities within CZ’s empire to control U.S. customer assets.
Binance.US’s holding company, known as BAM, has faced criticism for providing limited and allegedly incomplete evidence during the discovery process. The SEC has raised questions about whether the exchange is violating a previous consent order meant to restrict access to customer funds to local U.S. staff only.
In response, Binance.US has downplayed the SEC’s concerns about Ceffu, stating that creating wallets as a provider of the Ceffu software does not imply custody or access to customer funds by the company’s international arm.
Nevertheless, the departures of top legal and risk officers Krishna Juvvadi and Sidney Majalya are seen as the latest casualties in Binance.US’s ongoing battle with U.S. regulators.
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