SEC Starts Investigation For Companies Linked To Binance Founder

The SEC Starts investigation for companies linked to the Binance founder Changpeng Zhao as we can see further in our latest Binance news today.

The SEC starts investigation for the companies linked to the binance founder like Sigma Chain AG and Merit Peak LTD in connection with Binance’s CEO Changpeng Zhao. The US Securities and Exchange Commission is looking into the connection between crypto exchange Binance the US and two tradign companies that were related to Zhao as per the reports from the Wall Street Journal. According to the Journal’s anonymous sources, the agency wants to know the nature of Zhao’s involvement and whether the relationship was disclosed to customers so an open investigation doesn’t necessarily indicate any wrongdoing.

3/ Curiously, after @cz_binance stepped down, that gave way for Pascal Schmid and Guangying Chen to take over (Pascal has been there since January 2019 ; and Guangying Chen took over immediately afterward) pic.twitter.com/Omo82aWiPn

— James Edwards (@librehash) October 10, 2019

While little information about Merit Peak is publicly available, Sigma Chain is located in Zug, Switzerland which attracted crypto companies and organizations like Tezos and the Ethereum foundation. According to the corporate filings, Zhao was president until September 2019 and its current president was listed on some of the Binance corporate documents as an executive director. The Journal’s sources say Zhao remained in control of Sigma Chain and Merit Peak as of last year.

Both companies as market makers for Binance US mean that they use their assets to make trades happen and as the crypto exchange is only as good as its liquidity so if you want to buy $10,000 of ETH, you would have to have someone able to sell it to you. Market makers bring liquidity to exchanges and buy or sell assets while making a profit on every trade like a casino almost. What’s the SEC have to do with it all? The agency is charged with protecting consumers and oversight of exchanges engaged in spot trading of securities so the shares in companies are securities and the SEC argues that is the case with some cryptocurrencies.

Binance US said it doesn’t trade securities, however. It lists fewer than half as many coins and tokens as Coinbase and its 72 assets put it three behind Gemini which took some great pains to engage with the regulators and stay afloat. The SEC under Chairman Gary Gensler argued that the agency has a broader remit but Gensler also claimed the agency should have oversight of stablecoins and fiat-pegged tokens which serve as the lifeblood of the ecosystem. Binance’s name came up a lot last year in relation to US government agencies and it was a subject of a joint probe by the Department of Justice and the IRS in 2021.