Among other things, the case, which was filed in June of last year, accused Binance, Binance.US, and its creator, Changpeng Zhao, of participating in the sale of unregistered securities. Due to the legal action, the company's personnel was drastically reduced; more than 200 employees were let go, and sales sharply decreased.

In a December deposition, Binance.US Chief Operating Officer Christopher Blodgett discussed the implications of the SEC complaint; this information was made available to the public in a court document on March 5. Blodgett claims that the litigation has seriously harmed the business's connections with banks, making it difficult to carry out transactions in US dollars.


He warned banks that the company was "radioactive" and that their affiliation with Binance.US might put them under SEC investigation.

The company's market position has been impacted by the legal disputes in addition to its banking ties and workforce. Blodgett disclosed that shortly after the SEC filed a lawsuit, user assets on the site decreased by around $1 billion.

It has been said that the lack of financial assistance and the ensuing difficulty in locating new banking partners are "effectively choking the business." Binance.US worked with more than 20 market makers before the litigation; this number has since dropped to less than five, further demonstrating a lack of institutional faith.

In addition, the SEC accuses Binance.US of combining user funds in an account connected to Zhao at Merit Peak and engaging in wash trading to fictitiously increase trade volumes.
 

Additionally, the regulatory authority raised concerns about possible offshore transfers of customer funds, which resulted in the freezing of Binance.US' assets through a temporary restraining order (TRO). Nevertheless, a judge rejected this TRO the next day.

In a related incident, in November Binance, Binance.US, and Zhao agreed to pay $4.3 billion to settle charges of money laundering and financing of terrorism against the Department of Justice, Treasury, and the Commodity Futures Trading Commission. The SEC is keeping up its investigation and pressing charges against the Bitcoin exchange in spite of this settlement.
 

Zhao entered a guilty plea to a charge of money laundering, and he now faces a sentencing hearing on April 3 with a maximum penalty of 18 months in prison.