Binance.US, the American arm of the crypto giant Binance, is under the SEC’s microscope for alleged wash trading. 🛁
For those not in the know, wash trading is a naughty practice where an entity trades with itself to create the illusion of market activity. It’s like throwing a party and being the only one to show up, then telling everyone it was a rager.
The SEC is alleging that Binance.US, under the direction of CEO Changpeng Zhao, inflated trading volumes using multiple user accounts held by Sigma Chain, a Swiss trading company also controlled by Zhao.
Almost 70% of trading for a token was fake after Binance.US’s launch due to wash trading between Sigma Chain and Zhao’s accounts..
Binance.US has hit back, stating that the SEC’s allegations are “entirely unfounded” and based on a “misunderstanding of the facts.” They’ve also denied any engagement in or tolerance of wash trading. The crypto industry has an industry-wide issue of wash trading, which a recent study found to be responsible for over 70% of trading volume on crypto exchanges..
The SEC’s lawsuit has already had an impact, with Binance.US’s market share dropping to just over 1%. Regulatory heat is intensifying for Binance as the Justice Department conducts an investigation.. So, while Binance.US denies the allegations, the crypto world watches on, popcorn in hand. 🍿