Binance recently laid off over 1,000 employees and the firm’s CEO, Changpeng Zhao, is still trying to project confidence behind a laughing emoji. But a Twitter thread claims that the situation is not exactly what the chief pretends it is.
According to a report by The Wall Street Journal, an unnamed source familiar with the matter confirmed the layoffs at Binance. While a company spokesperson acknowledged the workforce reduction, they declined to disclose the exact number of employees affected.
“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,” said the spokesperson.
The news of the layoffs quickly spread on Twitter, and a crypto trader shared the story, prompting a response from Zhao. In his reply, Zhao used a laughing emoji and dismissed the reported number of layoffs as inaccurate.
He stated that involuntary terminations occur in every company, and the media’s figures were greatly exaggerated. Zhao also emphasized that Binance is still actively hiring.
However, it should be noted that Zhao did acknowledge turnover within the company in a previous statement last week. He recognized that market fluctuations, changes in the global crypto landscape, and personal circumstances can lead to personnel changes in any organization.
“We thank all of our ex-team members for their contributions to our growth and wish them all the best. We also congratulate our team members who have grown into these new roles. They are all truly high caliber. We continue to BUILD, and to continue to hire,” he said.
Before the layoffs, Binance had approximately 8,000 employees. According to the anonymous source in the report, the layoffs occurred in recent weeks and could potentially impact more than one-third of the company’s workforce in the future.
In addition to the layoffs, Binance has faced legal challenges. The U.S. Securities and Exchange Commission filed a lawsuit against Binance and Zhao in early June, accusing them of violating securities laws and engaging in other illicit activities. Binance responded by calling the lawsuit misguided. Subsequently, Democratic Senators Elizabeth Warren and Chris Van Hollen accused Binance of misleading Congress, leading to a request for an investigation by the U.S. Department of Justice.
Following this, Binance is currently facing a major crisis as key executives resign due to Zhao’s response to ongoing regulatory investigations. Senior figures, including general counsel Han Ng, chief strategy officer Patrick Hillmann, and SVP for compliance Steven Christie, have reportedly informed Zhao of their departure this week. This follows the recent exit of Matthew Price, a former IRS agent hired by Binance to oversee global investigations and intelligence in 2021.
“Not exactly trust building to lie”
Recently, Twitter user Adam Cochran raised concerns about Binance’s layoffs and questioned the company’s reasons for reducing employee benefits.
“Hey @cz_binance if your layoffs weren’t about cost cutting, why on June 19th did you announce on WEA that you suddenly cut extended benefits for all employees, & tell them it was because of ‘a decline in profit’? Not exactly trust building to lie about this…” Cochran tweeted.
Cochran pointed out that the average salaries of those laid off were significantly lower than industry standards, some as low as $50,000 per year. Comparing Binance to competitors like Coinbase, he highlighted that Binance should have significantly higher revenues while still maintaining lower costs. Cochran further questioned why Binance’s profits appeared to be down despite the ongoing bull trend in the cryptocurrency market.
He then highlighted the conflicting messages regarding hiring freezes and potential future layoffs, causing uncertainty among Binance employees.
“Then while telling us externally that you were still hiring, you have apparently told internal teams to freeze hiring and expect more layoffs over the next 3-6 months. Leaving Binance team members unsure when they’ll get suddenly cut themselves,” Cochran added.
Cochran further analyzed Binance’s financials, pointing out that the exchange should be generating annual revenues of $10 billion to $12 billion based on publicly available data. He raised questions about how this revenue was being allocated since it did not seem to align with employee compensation or BNB buybacks, considering the automatic burn mechanism of Binance Coin.
In response to potential counterarguments from Binance, Cochran predicted that the exchange might dismiss his claims as fear, uncertainty, and doubt (FUD), or even accuse the media of fabricating stories. However, Cochran emphasized that his observations were based on Binance’s own statements, raising valid concerns about the company’s financial health and decision-making processes.
Information for this briefing was found via The Daily Hold and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
