SEC Eyes Binance U.S Affiliates

Bob Mason
Updated: Feb 16, 2022, 06:05 GMT+00:00

Following the BlockFi penalty, the SEC was back in action this week, targeting Binance affiliates in the U.S that act as Binance market makers.

Apple iPhone and Binance logo, with dollars and cryptocurrency.

Crypto market regulatory scrutiny has drawn plenty of attention in recent months. A number of exchanges have come under the scrutiny of regulators. Calls by regulators and even the IMF for a global crypto regulatory framework have raised the prospects of a marked shift in the crypto regulatory landscape.

Earlier this month, the White House announced plans to release an executive action. The action will task U.S agencies with the regulation of cryptos in the interest of national security. With the White House calling on agencies to work with regulators from around the world, a blue print for a global crypto regulatory framework could be on the horizon.

Binance Has Faced Plenty of Regulatory Scrutiny

Crypto exchange Binance (BNB) has had plenty of airtime in recent months. The increase in scrutiny has put one of the largest crypto exchanges and its affiliates in the spotlight.

Late last year, Binance reportedly withdrew its Singapore application for failing to meet the Monetary Authority of Singapore’s AML and KYC requirements. Binance had also faced the wrath of regulators from the UK and the U.S earlier in the year.

Things didn’t get much better for Binance at the turn of the year. In early January, Binance faced the wrath of the Ontario Securities Commission (OSC). In response to some miscommunication from Binance, the OSC reiterated that Ontario users are not permitted to trade on Binance and are prohibited from opening new accounts. The OSC also stated that it would continue to ban Binance from marketing its services to Ontario-based users.

Following the “run-in” with the OSC, India’s central bank, the RBI searched Binance-owned crypto exchange Wazir-X on suspicion of tax fraud. The RBI searched 6 exchanges including Wazir-X.

Since then, while regulatory activity has been on the rise, Binance had enjoyed a quiet few weeks.

Binance Affiliates Appear on the SEC’s Radar

As the markets await the White House executive order on cryptos, the SEC has been busy in the crypto space. Just last week, news hit the wires of BlockFi having to pay a $100m penalty. The news came after SEC Chair Gensler warned of increased SEC scrutiny of digital assets earlier in the year.

With the SEC moving on from the BlockFi case, Binance was reportedly under scrutiny this week. According to the latest news reports, the SEC is investigating two counterparties that act as trading affiliates of Binance. The two affiliates, Sigma Chain AG and Merit Peak Ltd act as market makers that trade cryptos on the Binance’s U.S platform. For the SEC, the issue appears to be disclosure, with both entities reportedly having ties with Binance CEO Changpeng Zhao.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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