United States Securities and Exchange Commission (SEC), the world’s largest cryptocurrency It was learned that the US branch of the stock exchange Binance is investigating relations between the two companies owned by the company’s founder, Changpeng Zhao.
“Changpeng Zhao’s Own Companies Profit as Market Maker on Binance.US Platform”
Sigma Chain AG and Merit Peak Ltd. Two companies, named Binance.US, trade cryptocurrencies as market makers on the Binance.US platform.
It is claimed that by constantly trading, companies smooth out price fluctuations and profit from price differences.
Company documents from 2019 and former employees of Binance confirmed that Zhao has ties to these two different companies. Employees said that Zhao continued to control both companies at the end of last year.
The Wall Street Journal said the main concern with this situation is whether these two companies are getting preferential treatment from the Binance exchange in terms of speed and access.
Sources speaking to the Wall Street Journal are investigating how much of the Binance.US company’s ties to these companies is disclosed to customers by SEC officials. The SEC has requested information from Binance.US on the matter.
Company Spokesperson Made a Statement on the Subject
A Binance spokesperson said in his statements on the subject:
“Market-making activities are standard in both the traditional finance industry and the cryptocurrency industry. Just like with Citadel Securites. Or like Alamada Research in the role of market maker for FTX. As is known, this company is owned by FTX founder Sam Bankman-Fried. These companies provide liquidity, enabling end users to access a healthy, vibrant and efficient market.”
In 2019, the cryptocurrency exchange Binance was banned from operating in the US, after which the company established the Binance.US platform to comply with US laws.
Binance has also been subject to intense scrutiny globally in the past year. However, the stock market was quite successful in dealing with sanctions and making the necessary regulations.
*Not investment advice.