The US Securities and Exchange Commission (SEC) is investigating the US branch of the world’s largest crypto exchange Binance, as well as two trading companies associated with its founder Changpeng Zhao, The Wall Street Journal reports, citing sources.
We are talking about the companies Sigma Chain AG and Merit Peak Ltd., which trade cryptocurrency assets and act as market makers for Binance.US, the American branch of Binance. A market maker is a company that takes on the risks of purchasing and storing securities in its accounts. According to documents from 2019, both companies are associated with the owner and head of Binance, Changpeng Zhao, which was confirmed by the former heads of these companies.
The SEC will study how the crypto exchange discloses to clients the affiliation of these companies with Zhao. Sources also reported concerns from Binance.US’s legal and compliance teams regarding the origin of funds from Sigma Chain AG and Merit Peak Ltd.
The Binance website says that companies associated with the crypto exchange can conduct transactions on the trading platform, but the name of these companies is not indicated. A representative of Binance.US noted that the exchange does not have to disclose information about investors and corporate culture, but can transfer this data at the request of regulators.
Binance has faced pressure from financial regulators more than once in 2021. In August, the crypto exchange restricted access to a number of products for residents of South Korea and Malaysia. In July, it warned that it would stop trading cryptocurrency derivatives in Europe. The crypto exchange has also become the subject of investigations in Thailand, Singapore and the Cayman Islands.
Earlier it was reported that the Binance crypto exchange bought a stake in the American publication Forbes for $200 million. According to sources, as a result of the deal, Binance will become one of the largest shareholders of the publication.