SEC Lawsuit Impact: BinanceUS Fires Staff, Coinbase Losing Market Share to Robinhood

As per the latest Reuters report, Binance.US has carried a round of major layoffs since the US SEC slapped a lawsuit last week accusing the crypto giant of violating federal securities laws.

Sources familiar with the development told Reuters that at least 50 people have been laid off from Binance.US since the lawsuit filing. The sources further added that employees from Binance’s legal, compliance, and risks departments have been dismissed from their jobs. The sources have requested anonymity as the matter is private.

Earlier this month on June 5, the SEC slapped a lawsuit on Binance and its CEO Changpeng Zhao for creating a “web of deception” to evade securities laws. However, Binance has pledged to defend itself “vigorously” in the matter.

The SEC had also requested the court to freeze the funds of Binance.US citing the possibility of dissipation of funds. But earlier this week, the judge rejected the proposal adding that it’s in the interest of both parties to reach a mutual settlement.

Coinbase Loses Market Share to Robinhood

In another development, it turns out that a herd of retail crypto traders has been shifting base from crypto exchange Coinbase to Robinhood. Dan Dolev, an analyst at Mizuho Securities argues that Coinbase could be losing market share in retail crypto transaction volume, to Robinhood.

“There is no perfect explanation for potential share losses aside from worries about regulatory pressures given SEC actions against crypto, or the increase in small-ticket item retail trading fees at Coinbase,” Dolev wrote.

According to Dolev’s analysis of Coinbase’s shareholder letter and Robinhood’s monthly metrics report, it appears that either Coinbase is losing market share to Robinhood or their earnings from each transaction, known as take rates, have decreased. Dolev advises against assuming that retail take rates remained constant or decreased.

On Thursday, Coinbase (NASDAQ: COIN) shares initially dropped by 5.5% due to a general decline in cryptocurrency-related stocks. However, the drop was later reduced, leaving the stock relatively unchanged. Despite this, Coinbase shares have still increased by around 50% this year. Robinhood’s stock experienced small fluctuations between gains and losses.