Prominent cryptocurrency exchange, Crypto.com, endorsed by actor Matt Damon, has come under scrutiny for its internal proprietary trading operations, report by Financial Times.
The Singapore-based exchange has been conducting proprietary trading and market-making activities, a practice typically handled by separate firms in traditional markets. This has raised concerns about potential conflicts of interest and market manipulation.
Regulators in the US have already taken action against similar activities at other crypto exchanges. Binance faced charges from the Securities and Exchange Commission (SEC) for alleged manipulative trading.
The SEC chair, Gary Gensler, emphasized the need for a clear separation between the roles of exchanges and hedge funds in traditional finance.
The existence of Crypto.com’s alleged internal trading teams has been denounced by the exchange and the company had denied involvement in trading activities. However, sources revealed the possibility of the presence of internal market makers aiming to generate profits rather than facilitating exchange transactions.Â
Crypto.com defended these operations, stating that their internal market maker operates similarly to third-party market makers, ensuring efficient markets and tight spreads.
Despite the controversy, Crypto.com maintains that its revenue primarily comes from its retail trading app, where the company acts as the counterparty for transactions. The internal trading team hedges positions on various platforms, including their exchange, to maintain risk neutrality.
While the SEC’s actions have sparked attention, Crypto.com continues to actively trade significant volumes of cryptocurrencies. It is crucial to refer to recent sources for the latest updates on this evolving situation.
Also Read: Enhanced Liquidity Access: Crypto.com Partners with CoinRoutes
