Legal Head & Chief Risk Officer Left Binance.US!

Krishna Juvvadi, who served as the Head of Legal, and Sidney Majalya, the Chief Risk Officer, have recently parted ways with Binance.US amid heightened regulatory scrutiny and a series of leadership changes within the organization.

These departures coincide with the Securities and Exchange Commission (SEC) filing a lawsuit earlier this year against Binance, its founder Changpeng Zhao, and Binance.US, alleging their operation of an unlawful trading platform in the United States. Juvvadi had played a pivotal role as a key liaison with the SEC.

Furthermore, Binance has been undergoing significant shifts in its leadership, including the recent departure of CEO Brian Shroder and a reduction of its workforce by around 100 positions, amounting to approximately one-third of its employees. Norman Reed, Chief Legal Officer, has taken temporary charge during this transition.

Brian Shroder assumed the CEO role in 2021 after a highly productive stint as head of business development and global partnerships at Ant Group. Before this role, Shroder served as head of strategy and business development for Uber in the Asia Pacific region, and he was also a principal at Boston Consulting Group (BCG), where he spent six years.

In addition to these recent departures, Binance has witnessed the exit of other key executives, including Global Head of Product Mayur Kamat, earlier this month and Chief Strategy Officer Patrick Hillmann in July.

Binance.US has firmly stated that the lawsuit against it lacks merit and has vowed to vigorously defend itself in court against the unfounded allegations. The exchange contends that the regulator's complaint lacks a solid foundation based on available facts, applicable law, and prior actions taken by the SEC.

Concurrently, the United States Securities and Exchange Commission (SEC) has accused Binance.US of non-cooperation in the ongoing investigation into the crypto exchange, as noted in a court filing dated September 14. The SEC's court filing highlights that Binance.US's holding company, BAM, has provided only 220 documents during the discovery process, with many of them consisting of unintelligible screenshots and documents lacking dates or signatures.

The SEC also expressed concerns about Binance.US's utilization of Ceffu, wallet custody software provided by Binance Holdings Ltd. The SEC observed inconsistent statements from BAM regarding Ceffu's and Binance's involvement in wallet and customer funds management. BAM initially asserted that Ceffu was its wallet custody software provider but later indicated that Binance served in this capacity. This ambiguity raised concerns about the crypto exchange's compliance with a prior agreement to prevent fund diversion abroad.

In the wake of these regulatory actions, investors have reportedly withdrawn approximately $1.43 billion from Binance and its U.S. affiliate. Data from Nansen reveals net outflows of $1.34 billion worth of crypto tokens on the Ethereum blockchain from Binance, along with net outflows of $70.8 million from its U.S. counterpart, Binance.US.

In August, Binance sought a court order to protect itself against what it termed an inappropriate “fishing expedition” by U.S. regulators. Binance's requested protective order would limit the number of employees that the SEC can interrogate, excluding key figures such as CEO Changpeng “CZ” Zhao, because senior executives lack unique firsthand knowledge of the facts surrounding security, custody, and transfer of customer assets.

Binance is grappling with a challenging year as regulators intensify their scrutiny of crypto exchanges, particularly in the United States. In June, the Securities and Exchange Commission initiated legal action against the company, alleging violations of securities laws, building upon earlier accusations made by another American regulator, the CFTC.