In response to an ongoing Justice Department investigation, cryptocurrency exchange Binance is taking steps to lay off employees. A current employee familiar with the company's plans has revealed that these measures are being implemented in anticipation of a consent decree or settlement.
According to an anonymous source, cryptocurrency exchange Binance will be reducing its global workforce by 1,500 to 3,000 employees by the end of the year, reported CNBC.
Additionally, the source informed the publication that the previously reported layoffs of 1,000 employees, as mentioned in the Wall Street Journal on Friday, are included in the overall planned reduction. The source requested anonymity due to the sensitivity of the matter.
As per the employee who spoke to CNBC, the ongoing Justice Department probe is expected to bring about significant changes to the core structure of the company. Should Binance choose to resolve the allegations with the DOJ, it could potentially entail a substantial financial settlement amounting to billions of dollars.
Reuters reported that federal prosecutors are considering charges related to anti-money laundering violations and sanctions evasion, which could pose challenges for Binance and its founder, Changpeng Zhao, in obtaining licenses necessary for continued operation.
A spokesperson from Binance contested the notion that the layoffs would affect 3,000 employees, stating that the higher figure was inaccurate and "just not right."
The spokesperson said, “As we prepare for the next major bull cycle, it has become clear that we need to focus on talent density across the organization to ensure we remain nimble and dynamic. This is not a case of rightsizing, but rather, re-evaluating whether we have the right talent and expertise in critical roles.”
Over the past few months, Binance has encountered substantial regulatory hurdles, including legal action from both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). These lawsuits allege mishandling of customer assets and the operation of an unregistered, illicit exchange in the United States.
Despite being personally named in the SEC's lawsuit, Binance founder Changpeng Zhao has consistently downplayed concerns regarding the exchange's future. However, Binance has experienced notable repercussions following the legal actions initiated by U.S. regulators.
Outflows from the exchange have amounted to hundreds of millions, and the company has also witnessed the departure of several key executives.