SEC Lawsuit Fallout: Binance.US Implements Layoffs, Robinhood Surpasses Coinbase in Market Share

The post SEC Lawsuit Fallout: Binance.US Implements Layoffs, Robinhood Surpasses Coinbase in Market Share appeared first on Coinpedia Fintech News

According to a recent report from Reuters, Binance.US has undergone significant layoffs following a lawsuit filed by the US Securities and Exchange Commission (SEC) accusing the cryptocurrency giant of violating federal securities laws.

Insiders familiar with the matter revealed to Reuters that Binance.US has laid off a minimum of 50 employees since the lawsuit was filed. The sources disclosed that individuals from Binance’s legal, compliance, and risk departments were among those let go. Due to the sensitive nature of the issue, the sources requested anonymity.

SEC goes after two of the largest crypto players

Earlier this month, on June 5, the SEC filed a lawsuit against Binance and its CEO, Changpeng Zhao, alleging the creation of a deceptive network to circumvent securities laws. However, Binance has expressed its firm commitment to defending itself vigorously against these accusations.

The SEC also sought to freeze the funds of Binance.US, citing concerns over the potential dissipation of assets. However, earlier this week, a judge rejected the proposal, emphasizing that reaching a mutual settlement would be in the best interest of both parties.

Coinbase, on the other hand, has experienced a loss in market share to Robinhood as a significant number of retail crypto traders have migrated from Coinbase to the latter. Analyst Dan Dolev from Mizuho Securities suggests that Coinbase may be losing market share in terms of retail crypto transaction volume to Robinhood.

Dolev points out that regulatory pressures stemming from the SEC’s actions against cryptocurrencies or an increase in small-ticket retail trading fees at Coinbase could explain these potential share losses. Dolev analyzed Coinbase’s shareholder letter and Robinhood’s monthly metrics report, indicating that either Coinbase is losing market share to Robinhood or their take rates, representing earnings per transaction, have declined. Dolev advises caution against assuming that retail take rates have remained constant or decreased.

Coinbase encountered an initial decline of 5.5% in its shares on Thursday, primarily attributed to a broader decrease observed in cryptocurrency-related stocks. However, the decline was later mitigated, resulting in relatively unchanged stock prices. Nonetheless, Coinbase shares have seen an overall increase of approximately 50% this year. Robinhood’s stock, on the other hand, has exhibited minor fluctuations between gains and losses.