The Securities and Exchange Commission (SEC) has opened an investigation into the U.S. unit of cryptocurrency exchange Binance to determine the nature of its relationship with two trading companies that are associated with Binance CEO Changpeng Zhao.
According to the Wall Street Journal, the SEC is investigating the relationship between Binance US and trading companies Sigma Chain AG and Merit Peak.
The regulator has reportedly asked the U.S. cryptocurrency exchange for information about the two companies and is trying to find out if Binance US partners had priority access and transaction speeds on the platform.
The commission also intends to find out whether the exchange disclosed information about its ties to these market makers.
According to the publisher, Sigma Chain AG and Merit Peak constantly buy and sell cryptocurrency on Binance US, which usually reduces price volatility.
“Marketmaking is a standard activity in both the cryptocurrency and traditional markets. Citadel Securities or Alamada Research, owned by FTX exchange founder Sam Bankman-Fried, provides such services. They provide liquidity and directly support market efficiency for the benefit of end users,” Binance said.
The regulator previously brought 97 cases against cryptocurrencies, including Poloniex and Blockchain Credit Partners, and issued $2.35 billion in fines between 2013 and 2021.