SEC probes Binance US over links with two market makers


Binance US is allegedly under investigation by the US Securities and Exchange Commission (SEC) over its relationship with two market makers. A report from the Wall Street Journal says that the SEC believes that the company’s CEO, Changpeng Zhao, is affiliated with these trading firms.

SEC investigating Binance US

The report published by the WSJ on Tuesday mentioned that the two firms with which Zhao allegedly has a relationship are Sigma Chain AG and Merit Peak. The report notes that the SEC has requested information from Binance US on its relationship with the two market-making firms.

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The commission is also investigating whether Binance US had disclosed its relationship with the two firms to its users. The report adds that the SEC has garnered information on this matter from various sources linked Zhao and Binance US to the market makers.

The SEC is referring to corporate documents dating back to 2019 and testimonies from former executives at the exchange. Sigma Chain AG and Merit Peak acted as market makers where they bought and sold cryptocurrencies on Binance US to lower the price volatility.

The SEC is yet to issue a statement on how it will take further action if any wrongdoing is confirmed. Moreover, the regulatory body is yet to confirm that an investigation into Binance US regarding this matter has been launched.

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SEC enforcing crypto regulations

The SEC has been adamant about enforcing regulations in the cryptocurrency sector. The number of enforcement actions against cryptocurrency firms by the regulator has totalled 97. Out of this, the SEC has collected $2.35 billion in penalties. Some of the largest crypto firms to be hit by fines from the regulator are Blockchain Credit Partners and Poloniex. The SEC also imposed a $100M penalty on BlockFi.

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In May last year, reports stated that Binance was being investigated by the Department of Justice and the Internal Revenue Service. The two bodies wanted to halt the use of cryptocurrencies for illegal activities by users on Binance US.

Another report in March last year said that the exchange was under investigation by the Commodity Futures Trading Commission (CFTC) over users’ activity on the exchange. The exchange, through its CEO, denied that it had violated any laws. However, Binance has faced a series of regulatory issues in Thailand, Singapore, and Malaysia.

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