Binance.US, the US arm of Binance, is facing new charges of wash trading by the Securities and Exchange Commission (SEC). Internal messages exchanged between Binance.US employees supporting these accusations have been leaked, causing trouble around the US subsidiary of the world’s largest exchange.
Binance.US faces new wash trading charges
While the United States banned wash trading almost a century ago, the Securities and Exchange Commission (SEC) accuses Binance.US, the American branch of Binance, of having resorted to this practice to artificially inflate trading volumes on its platform.
According to the US regulator, more than 70% of the trading volume of a cryptocurrency (its ticker was not specified) was the result of trading operations carried out the day after the opening of Binance.US by accounts hosted at Sigma Chain, high-ranking employees as well as accounts held by Changpeng Zhao. Sigma Chain, whose name came out in the first SEC accusations, is a Swiss trading company run by CZ.
A spokeswoman for Binance.US denied the facts, citing a misunderstanding by the SEC:
“We strongly believe that the SEC’s claims regarding wash trading are entirely unfounded and based on a fundamental misunderstanding of the facts and misapplication of applicable law. »
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According to an internal document seen by The Wall Street Journal, while $70,000 worth of BTC traded in Binance.US’ first hour of opening, Changpeng Zhao said it was likely an internal trade: it was ourselves, I think “.
Furthermore, a high-ranking employee reportedly wrote to Catherine Coley, then CEO of Binance.US, to warn her that the structure in charge of matching transactions on the platform did not prevent users from “ make transactions with themselves “. Later, another employee had also reported the possibility of carrying out wash trading internally :
“Apparently we have nothing in place to prevent wash trading? I tested it myself, I sold a market order into my own buy order. »
Another spokesperson also categorically denied the accusations:
“Binance does not engage in or condone wash trading, which is a violation of our Terms of Service, and has never done so. Binance has a dedicated Market Surveillance team that is responsible for reviewing surveillance related to potential abusive and/or manipulative behavior, including wash trading and trade price manipulation. »
According to a study, the use of wash trading would have made it possible to reach a volume of more than 6,000 billion dollars in the first quarter of 2020, all exchanges combined. However, Coinbase is among the only US-based crypto exchanges not to have resorted to this practice, according to the same study.
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Source: Wall Street Journal
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