The US Securities and Exchange Commission (SEC) is probing the relationship between Binance.US and two trading firms tied to Binance's founder Changpeng Zhao, the Wall Street Journal has learned, citing people familiar with the matter. The report says the two trading firms, Sigma Chain AG and Merit Peak Ltd., act as market makers on Binance.US.
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The exchange has indeed mentioned on its website that affiliated firms may trade on the exchange but did not name them. The sources say the SEC requested information about the two entities from Binance.US. According to reports, Changpeng Zhao controlled both of the firms at least back in 2019.
James Angel, a finance professor at Georgetown University's McDonough School of Business, says the regulator's interest in affiliated firms might be due to a possible "unfair advantage" since it remains unclear if Binance.US provides its partners with preferential access. As of press time, the SEC made no allegations against Binance.US of wrongdoing.
In September 2021, Bloomberg reported that the US Commodity Futures Trading Commission (CFTC) initiated an investigation against Binance over alleged insider trading. The regulator was reportedly looking for potential witnesses regarding the matter but made no public allegations.
In March last year, the CFTC also initiated another investigation against Binance to find out whether the exchange had broken rules by permitting Americans to trade on its platform, which is not registered with the agency.
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