The Securities and Exchange Commission is looking into the relationship between the US arm of Binance, the largest cryptocurrency exchange globally, and two trading firms with ties to Binance founder Changpeng Zhao, according to a report by The Wall Street Journal Tuesday.
Merit Peak Ltd. and Sigma Chain AG are market makers that trade cryptocurrencies on the Binance U.S. exchange. The SEC is investigating links between trading firms and the exchange, the report said, citing unnamed sources familiar with the matter.
Market makers strengthen liquidity and add stability by constantly buying and selling assets. They make a profit from the small difference between the bid and offer price.
The Wall Street Journal report stated that Binance says on its website that it is affiliated market makers can trade on the exchange. However, the platform doesn’t disclose which firms are doing it.
The SEC has brought enforcement actions against trading firms that didn’t disclose trading by affiliates on their platforms.
