Binance is once again the subject of government regulatory scrutiny. The report indicates that U.S. -based Binance is facing an investigation claim by the SEC. The SEC is investigating Binance U.S.’s relationship with two other trading firms that act as ‘market makers’ (i.e. components that supply liquidity when needed).
Based on a report cited by the WSJ, a close source informed that the issue occurred because the SEC was concerned about the crypto exchange’s (Binance) disclosure of its relationship with other trading firms to clients.
Based on the research, it was found that both firms, Sigma Chain AG and Merit Peak Ltd., are owned by Binance founder, Changpeng Zhao. The SEC is investigating whether trading firms receive preferential treatment as ‘market makers’ who trade cryptocurrencies on exchanges. The Binance.US website explains that ‘market makers’ can trade on their platform.
However, a Binance.US spokesperson explained that there was no wrongdoing in allowing ‘market makers’ to trade on traditional financial exchanges as well as cryptocurrencies. It acts as a component that ensures liquidity and directly supports a healthy, vibrant and efficient market for the benefit of end users, the spokesperson said.
Binance had previously been slandered when last year, the Commodity Futures Trading Commission (CFTC) opened an investigation against Binance for fear of trading the derivatives it offered illegally.
The SEC’s enforcement actions continue to face criticism from various quarters. However, the SEC continues to do its best in regulating the crypto market. In an enforcement action last week, crypto lending platform, BlockFi, reached an agreement to pay $ 100 million in settlement to the SEC and other state regulators.
The SEC is also targeting other crypto lending platforms and exchanges including Gemini, and Celsius.
