The US’s Securities and Exchange Commission is looking into the connection between Binance and two trading firms – Sigma Chain AG and Merit Peak Ltd. Both companies act as market makers that trade cryptocurrencies on the Binance US exchange.
The SEC is focusing on how the world’s largest cryptocurrency exchange disclosed to customers its link to the two trading companies. Experts say market makers bolster liquidity and add stability through constantly buying and selling assets. They make profits from the small difference between the bid and offer price. Market makers use their assets to make trades happen.
Moreover, a report by WSJ highlights that Binance, on its portal. says affiliated market makers may trade on the exchange, but doesn’t publish names of which firms might do so. The US watchdog is said to be cracking down on trading firms that haven’t disclosed trading affiliates on their platforms. As such, it has asked Binance for information about Sigma Chain and Merit Peak.
Former executives, as per the report, have revealed that Changpeng Zhao, the founder, and CEO of Binance, controlled Sigma Chain and Merit Peak as of late 2021. Corporate documents from 2019 have linked Zhao to the two companies. Zachary Tindall, a spokesperson for Binance, said the platform is committed to upholding the highest standards of compliance.
Furthermore, Stephen Milton – spokesman for Binance, was quoted by the report saying that Binance as a private company doesn’t need to disclose details of its investors or corporate structure. He said information is shared with regulators when requested.
Binance maintains that it doesn’t trade securities.