The Securities and Exchange Commission (SEC) in the United States is apparently investigating Binance’s U.S. subsidiary for two market makers trading firms linked to Binance CEO Changpeng Zhao.
The SEC is investigating Binance.US’s relationship with trading firms Sigma Chain AG and Merit Peak, according to a Wall Street Journal report published Tuesday.
According to reports, the federal government has requested information on the two companies from the US crypto exchange and is looking into how it may have disclosed its potential ties to market makers to users.
Zhao is linked to both trading firms, according to corporate filings from 2019 and former Binance executives, according to the news outlet.
Market makers Sigma Chain AG and Merit Peak buy and sell cryptocurrency on Binance. Continuously in the United States, which usually decreases price volatility.
Some SEC investigations
Even if the SEC verified an investigation was ongoing, it’s unclear how it would continue with any enforcement action. Between 2013 and 2021, the government initiated 97 enforcement cases against crypto businesses, including Poloniex and Blockchain Credit Partners, with a total penalty of $2.35 billion.
Binance was reportedly investigated by the Department of Justice and the Internal Revenue Service in May 2021 in an attempt to prevent U.S. residents from using cryptocurrency for illegal transactions.
According to a March report, the Commodity Futures Trading Commission was also looking into the largest crypto exchange’s behaviour involving US users. At the time, Binance CEO Changpeng Zhao dismissed any charges of wrongdoing at the exchange.
