SEC Probing Binance US Trading Affiliates

SEC Probing Binance US Trading Affiliates

The U.S. Securities and Exchange Commission has been relentless in its pursuit of crypto companies this year, and its latest targets are those affiliated with the Binance US exchange.

The financial regulator appears to be on the warpath with regards to digital assets and it has begun probing two trading companies affiliated with the American branch of the world’s largest crypto exchange.

According to the Wall Street Journal, citing people familiar with the matter, the SEC has been investigating Sigma Chain AG and Merit Peak Ltd., market makers on the Binance.US exchange.

The Feb 15 report added that the regulator is concerned about how Binance disclosed its links with the two trading firms. The exchange does state that market makers may trade on its platform, but does not specify which ones.

CZ tie up

The report added that corporate documents going back to 2019 link the two firms with Binance CEO Changpeng Zhao (CZ) who controlled them both as of late last year.

Binance spokesmen, Stephen Milton, said that as a private company, it doesn’t need to disclose details of its investor or corporate structure before adding, “however, that information is shared with regulators when requested.”

The SEC would need to have jurisdiction over some of the assets the fully regulated Binance.US exchange offered in order to bring enforcement. The regulator has repeatedly labeled many cryptocurrencies as securities though a formal framework declaring them as such has yet to be released leading to further confusion and misperceptions in the industry.

In late 2020, the SEC subpoenaed Binance.US demanding details on who controlled it, how it made money, what disclosures it made to customers, and how it linked up to the global Binance exchange which does not fall under the regulator’s jurisdiction.

SEC crypto warpath

The U.S. financial regulator also has major beef with decentralized finance lending platforms. It has taken enforcement action against almost 100 crypto companies, mostly in the name of investor protection.

The most recent high-profile case was the $100 million fine levied on DeFi lending platform BlockFi. The SEC accused the platform of offering unregistered securities and industry observers are concerned that the action could end DeFi lending products for retail traders.

The SEC may also go after the embattled Wonderland DeFi platform following the recent imbroglio involving the controllers of its treasury and Protocol Controlled Value (PCV). Industry experts have warned that this would give policymakers the perfect excuse to come down on DeFi with heavy-handed restrictions and regulations.


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