The US Securities and Exchange Commission (SEC) has reportedly launched an investigation into the crypto exchange giant Binance’s US arm regarding trading firms connected to Binance CEO Changpeng Zhao. According to a recent report from the Wall Street Journal, the SEC is looking into the relationship between Binance.US and trading firms Sigma Chain AG and Merit Peak.
The US SEC has reportedly requested information from Binance on two companies.
The federal regulator has reportedly requested information from the US crypto exchange on the two companies and is investigating how it may have disclosed its potential links to the market makers to users. The news outlet reported that corporate documents from 2019 and former Binance executives connect Zhao to both trading firms. Sigma Chain AG and Merit Peak, acting as market makers, both buy and sell crypto on Binance.US continuously, which usually reduces price volatility. It’s unclear how the federal regulator might proceed with any enforcement action even if it confirmed an investigation was underway.
The crypto exchange giant has been in trouble before.
As reported earlier in May 2021, the crypto exchange was reportedly under investigation by both the Department of Justice and the Internal Revenue Service in an attempt to stop US residents from using crypto for illicit transactions. A report from March suggested that the Commodity Futures Trading Commission was also investigating the major crypto exchange regarding the activity of US users. Binance CEO Changpeng Zhao denied any allegations of misconduct at the exchange at the time.
The SEC first subpoenaed the US arm of Binance in late 2020, seeking information about the stakeholders, business model, and other disclosure-related information.