The U.S. Securities and Exchange Commission (SEC) is reportedly scrutinizing the U.S. arm of cryptocurrency exchange Binance over trading firms with links to Binance CEO Changpeng Zhao. SEC Chairman Gary Gensler emphasizes the need for “basic investor protection” in the crypto space.
Binance US probed by the SEC
The U.S. Securities and Exchange Commission (SEC) is reportedly investigating the U.S. arm of cryptocurrency exchange Binance (Binance US).
The securities watchdog is examining the relationship between Binance US and two trading firms with ties to Binance CEO Changpeng Zhao (CZ), the Wall Street Journal reported Tuesday, citing people familiar with the matter.
The two companies are Sigma Chain AG and Merit Peak Ltd. They act as market makers who trade cryptocurrencies on the American stock exchange Binance.
However, the SEC alleges that Binance US did not disclose to its customers the links between the exchange and the two trading firms, the people say, adding that the SEC has requested information about the two companies from Binance US.
On Wednesday, Fox Business interviewed SEC Chairman Gary Gensler about Binance US news and the SEC’s efforts to regulate the crypto space. Although the SEC chief did not specifically comment on the US investigation into Binance, he cited “basic investor protection” as the primary driver of all SEC actions.
Chair Gensler detailed:
Most of the activity in this asset class, $2 trillion, is happening on centralized exchanges or lending platforms.
He then talked about the enforcement actions taken against cryptocurrency lender Blockfi. The company agreed to pay $100 million to settle the charges with the SEC and state regulators.
Gensler emphasized the importance of ensuring “basic investor protection — protection against fraud and manipulation.” He reiterated that many of the tokens on crypto exchange platforms may be securities.