Binance.US Faces New Washing Fees
While the United States banned the trade in laundry nearly a century ago, The Securities and Exchange Commission (SEC) accuses Binance.US, the US arm of Binance, of engaging in this practice to artificially inflate trading volume 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 with Sigma Chain, senior employees as well as accounts owned by Changpeng Zhao. Sigma Chain, whose name emerged in the first SEC charges, is a Swiss trading company run by CZ.
A spokeswoman for Binance.US denied the facts, citing a misunderstanding by the SEC:
“We are convinced that the SEC’s allegations regarding laundry trading are completely without merit 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’s first hour after opening, Changpeng Zhao said it was likely an insider trade: it was ourselves, I think “.
Furthermore, a senior employee reportedly wrote to Catherine Coley, then CEO of Binance.US, warning her that the structure responsible for 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 laundry trade internally :
“Apparently we have nothing in place to prevent trade in washing? I tested it myself, I sold a market order to my own buy order. »
Another spokesperson also categorically denied the allegations:
“Binance does not engage in or condone money laundering, which is a violation of our Terms of Service, and has never done so. Binance has a dedicated market monitoring team responsible for reviewing surveillance related to potential abusive and/or manipulative behavior, including money laundering and price manipulation.”
According to a study, the use of laundry trade 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 that have not resorted to this practice, according to the same study.
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Source: Wall Street Journal