Corporate documents from 2019 link Changpeng Zhao, the founder and CEO of Binance, to the two trading companies, with former executives saying that as of late last year, Mr. Zhao controlled them both.
A Binance.US spokesman, Zachary Tindall, declined to comment on the SEC investigation and any relationship with the two trading companies. “Binance.US is committed to maintaining the highest standards of compliance,” he said.
While the SEC did not announce major actions against large cryptocurrency exchanges, the commission has threatened to sue companies that offer cryptocurrency loans.
According to The wall street Journal, “Market makers are important players in the trading world. They help smooth out price fluctuations by continually buying and selling, even when markets are choppy. They are paid by collecting a small difference between the bid and ask price” .
The SEC has already taken action against trading venues that failed to disclose that they had affiliates trading on their platforms. In 2015, Investment Technology Group Inc., which was later acquired by Virtu, paid $20 million and admitted that it operated a secret trading desk that interacted with orders submitted to ITG’s trading platform, known as a dark pool.
To take action against the US arm of Binance, the SEC would need to show that it has jurisdiction over some cryptocurrencies that Binance. Despite this, the regulatory body sometimes initiates and closes investigations without making charges or taking enforcement action.
The SEC originally sent a subpoena to Binance’s US arm in late 2020The Wall Street Journal previously reported. He requested information on who controls Binance, how it makes money, what disclosures it makes to clients, and whether trading on Binance.US is separate from activity on the largest global exchange.
The regulatory agency, whose mission is the protection of investors, has already taken almost 100 enforcement actions related to cryptocurrencies. SEC Chairman Gary Gensler said that the crypto market is a “Wild West” that needs formal rules to protect traders. Gensler turned his attention to cryptocurrency exchanges.
Source: Ambito
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