According to reports, the U.S. Securities and Exchange Commission has launched an investigation into Binance’s U.S. division regarding trading firms linked to Binance CEO Changpeng Zhao.
According to the Wall Street Journal’s Tuesday report, the SEC is investigating the relationship between Binance.US trading firms Sigma Chain AG (and Merit Peak) according to the Wall Street Journal. According to reports, the federal regulator requested information from the U.S. cryptocurrency exchange about the two companies. It is also investigating whether it might have revealed its possible links to market makers to users.
According to the news outlet, Zhao is connected to both trading companies by corporate documents dating back as far as 2019, as well as former Binance executives. Merit Peak and Sigma Chain AG, who act as market makers, buy and sell crypto on Binance.US constantly, which reduces volatility.
Even if an investigation is underway, it’s not clear how the SEC will proceed with any enforcement actions. Cointelegraph reported Jan. 20 that there were 97 enforcement actions taken against crypto firms including Poloniex, Blockchain Credit Partners and Blockchain Credit Partners. The penalties totaled $2.35 Billion between 2013-2021.
Related: SEC hits BlockFi With a $100 Million Penalty, Gives 60 Days to Comply with a 1940 Law
Binance was under investigation by the Department of Justice as well as the Internal Revenue Service in May 2021. This was to prevent U.S. citizens from using crypto for illegal transactions. According to a March report, the Commodity Futures Trading Commission was also looking into the activities of U.S. users. Changpeng Zhao, Binance CEO, denied any misconduct allegations at the exchange at that time.
Cointelegraph reached Binance.US, Binance, but was not able to get a response by the time of publication.