Binance.US trading affiliates under SEC investigation – report

Sputnik news agency and radio 16.2.2022

Earlier, the world's largest cryptocurrency exchange Binance was investigated by the Department of Justice and the Internal Revenue Service over possible violations related to money laundering and tax crimes. So far, no charges have been brought against the platform.

The US Securities and Exchange Commission (SEC) was said to be investigating into Binance’s US arm over its ties with trading market makers related to acting Binance CEO Changpeng Zhao, The Wall Street Journal reported on Tuesday.

According to US financial legislation, market-makers should not be affiliated with platforms whose assets they trade, as it may lead to market manipulation by coordinated operations.

SEC aims to determine how Binance.US is related to two trading firms, Sigma Chain AG and Merit Peak. The federal regulator has reportedly requested information about them from Binance and is investigating the way it may have disclosed its alleged ties with market makers to users, according to the newspaper.

The report claimed that the link between Zhao and both trading firms was confirmed by corporate documents from 2019 and former Binance executives. Sigma Chain AG and Merit Peak, as market makers, buy and sell cryptocurrency on Binance.US, which usually reduces price volatility.

On its website, the trading platform says that affiliated market makers may trade on the exchange, though it doesn’t specify which firms might do so.

In May last year, the Department of Justice and IRS launched a query into Binance’s operations. According to Bloomberg, the probe was said to be aimed at examining both the platform’s clients and its employees. Experts calculated that more funds related to criminal activity have passed through Binance than any other crypto exchange.