Crypto exchange Binance is laying off employees in response to an ongoing Justice Department probe that is likely to end with a consent decree or settlement, according to a current employee who is familiar with the company’s plans.
The cuts will eliminate 1,500 to 3,000 of Binance’s global workforce, this person told CNBC, and will take place through the end of the year. The Wall Street Journal previously reported on Friday that 1,000 employees have already been laid off, and those layoffs are part of the total planned, the source told CNBC. This person asked to remain anonymous because they are not authorized to talk to the press about internal matters.
The Justice Department probe will likely reshape the company fundamentally, the employee told CNBC. If Binance opts to settle the DOJ allegations, it could result in a multi-billion dollar payment. Reuters has reported that federal prosecutors have been weighing anti-money laundering violations and sanctions evasion charges, allegations that would make it difficult for Binance or founder Changpeng Zhao to continue to get licenses to operate.
A Binance spokesperson disputed that the cuts would impact 3,000 employees, saying that the high-end number was “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.”
Binance has faced significant regulatory challenges over the last few months, culminating in lawsuits from the Securities and Exchange Commission and the Commodity Futures Trading Commission over alleged mishandling of customer assets and the operation of an illegal, unregistered exchange in the U.S.
Binance founder Changpeng Zhao has repeatedly dismissed concerns about the future of the exchange, even after being personally named in the SEC’s lawsuit. Binance itself has suffered significantly since the lawsuits from U.S. regulators, with exchange outflows running into the hundreds of millions. The company has also seen a number of key executive departures.