Binance.US Faces Investigation From SEC Over Trading Affiliates: Report

The U.S. Securities and Exchange Commission (SEC) has reportedly opened a probe into Binance.US, the American branch of the world’s biggest crypto exchange Binance, and its trading affiliates.

Probe Into Binance.US Ongoing

Citing people familiar with the matter, The Wall Street Journal reported on Tuesday that the SEC is investigating the relationship between Binance.US and trading firms Sigma Chain AG and Merit Peak Ltd.

Former executives, as well as corporate documents from 2019, confirm that the founder and CEO of Binance, Changpeng Zhao, helmed both firms as of late 2021. Sigma Chain AG and Merit Peak Ltd are believed to act as market makers on Binance.US, meaning they use their assets to facilitate trades.

The securities watchdog wants to know whether the exchange disclosed these relationships to its clients. Though Binance.US argues that market makers can trade crypto assets on its exchange, it doesn’t specifically name the two trading firms in question.

A probe doesn’t necessarily mean the exchange is being accused of any wrongdoing. Representatives of Binance told the Journal that the exchange is not required to reveal its organization setup to members of the public, but it’s open to providing this information to regulators when prompted.

Binance’s Regulatory Difficulties

Binance has been inadvertently caught in the crosshairs of regulators for years.

In September last year, Binance was investigated by the Commodity Futures Trading Commission (CFTC) for allegations of insider trading and market manipulation. Prior to that, the exchange had been probed by the Justice Department and Internal Revenue Service for information related to money laundering and tax evasion.

Binance launched its U.S. entity in 2019 after regulatory barriers prevented American customers from using its global platform. Binance.US was subpoenaed by the SEC in 2020 for information on whether the US-based arm operated independently from the main exchange.

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