In response to an ongoing Justice Department investigation that is likely to result in a consent decree or settlement, Binance is laying off employees, according to a current employee with knowledge of the company’s plans.
This individual told CNBC that the layoffs will occur through the end of the year and affect between 1,500 and 3,000 Binance employees worldwide. The Wall Street Journal reported on Friday that 1,000 employees have already been let go; according to a source speaking to CNBC, these reductions are part of the total planned. This individual requested anonymity because they are not authorized to discuss internal matters with the media.
The employee told CNBC that the Justice Department’s investigation will likely radically alter the company. If Binance opts to resolve the DOJ’s allegations, a multibillion-dollar payment could result. According to Reuters, federal prosecutors are contemplating anti-money laundering and sanctions evasion charges, which would make it difficult for Binance or its founder Changpeng Zhao to continue to obtain operating licenses.
A spokesperson for Binance disputed that the layoffs would affect 3,000 employees, stating that the upper estimate was “just not right.”
The spokesperson stated, “As we prepare for the next major bull market, it has become abundantly evident that we must prioritize talent density throughout the organization in order to maintain our agility and dynamism. This is not a case of downsizing; rather, we are reassessing whether we have the appropriate talent and expertise in key positions.”
In the past few months, Binance has faced significant regulatory challenges, culminating in lawsuits from the Securities and Exchange Commission and the Commodity Futures Trading Commission for alleged mismanagement of customer assets and operation of an illegal, unregistered exchange in the United States.
Even after being personally named in the SEC’s lawsuit, Binance’s founder Changpeng Zhao has repeatedly dismissed worries about the viability of the exchange. With exchange outflows in the hundreds of millions of dollars, Binance has suffered substantially since the lawsuits brought by U.S. regulators. The company has also experienced the departure of several important executives.