In a recent report by the Financial Times, Crypto.com, a prominent cryptocurrency exchange backed by actor Matt Damon, has come under scrutiny for its internal proprietary trading activities. The Singapore-based exchange’s practice of conducting proprietary trading and market-making operations, typically handled separately in traditional markets, has raised concerns regarding potential conflicts of interest and market manipulation.
Similar activities at other crypto exchanges have already attracted regulatory action in the United States. Binance, for instance, faced charges from the Securities and Exchange Commission (SEC) for alleged manipulative trading. Gary Gensler, the SEC chair, stressed the importance of maintaining a clear separation between the roles of exchanges and hedge funds in traditional finance.
Previously unknown to the public, the existence of Crypto.com’s internal trading teams has now come to light. The company had previously denied any involvement in trading activities. However, insider sources have confirmed the presence of internal market makers whose primary objective is to generate profits rather than facilitating exchange transactions.
Crypto.com has defended its operations, asserting that its internal market maker functions similarly to third-party market makers, ensuring efficient markets and tight spreads. The company maintains that its revenue primarily stems from its retail trading app, where it acts as the counterparty for transactions. To maintain risk neutrality, the internal trading team hedges positions across various platforms, including their own exchange.
Despite the ongoing controversy, Crypto.com continues to actively engage in substantial volumes of cryptocurrency trading. For the latest updates on this evolving situation, it is crucial to refer to recent sources.
Compiled by Coinbold