Crypto.com Misleads Customers And Operates As Internal Market Makers: Report

Key Points:

• Crypto.com operates internal proprietary trading and market-making teams, which has sparked concerns about potential conflicts of interest and regulatory scrutiny.
• The existence of Crypto.com’s internal traders has not been widely known since the platform launched in 2016.

Crypto.com operates proprietary trading and market-making teams, improving customer liquidity and running as a broker model. Executives deny internal market-making operations.

Financial Times reveals that Crypto.com, one of the top-10 crypto marketplaces in the world, operates proprietary trading and market-making teams. According to the report, these teams are responsible for boosting liquidity on the exchange and trading tokens for profit. This is a significant revelation, as in most markets, exchanges match buyers with sellers at the most competitive transparent price. In contrast, separate private companies usually conduct market-making and proprietary trading.

Crypto.com’s internal traders have not been widely known since the platform launched in 2016, and the company executives have reportedly given “absolutely dramatic sworn statements” that it was in no way involved in trading. However, the company has confirmed the existence of its internal market maker, stating that it operates on the exchange and is treated exactly the same as third-party market makers that facilitate tight spreads and efficient markets on the platform.

Despite Crypto.com’s reassurances, the revelation of the internal trading teams has sparked concerns about potential conflicts of interest and regulatory scrutiny. US regulators have already begun clamping down on similar activities at other digital asset exchanges, with the Securities and Exchange Commission hitting Binance, the world’s biggest crypto exchange, with 13 charges, including using a trading firm owned by CEO Changpeng Zhao to engage in “manipulative trading that artificially inflated the platform’s trading volume”.

Crypto.com is a private company and publishes accounts in various countries, including Malta, which do not show revenue by business line. The company said that most of its revenues came from its app for retail traders, where it acted as the customers’ counterparty for transactions and ran as a broker model.

The exchange is for institutional traders and “operates as a level playing field trading venue”, according to Crypto.com. However, the recent SEC enforcement actions have led the company to announce that its exchange for institutional US traders would be shutting from June 21 due to limited demand in the current market landscape.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Join us to keep track of news: https://linktr.ee/coincu

Thana

Coincu News