Crypto.com, a Singapore-based cryptocurrency exchange, has recently come under scrutiny due to a report by the Financial Times that raised concerns about potential conflicts of interest within the crypto industry. The report highlights that exchanges should allow buyers and sellers to trade at fair, competitive pricing, while separate private businesses typically carry out proprietary trading and market-making. Crypto.com’s policy of employing internal teams for market making and proprietary trading could draw regulatory notice.
Similar practices at other digital asset exchanges have been subject to increased scrutiny from US regulators, with Binance currently facing 13 charges from the SEC, including allegations of manipulative trading by a trading firm run by its CEO. Sources have claimed that Crypto.com executives gave sworn denials of their involvement in trading, while employees were allegedly instructed to deny the existence of an internal market maker operation. In response to questions from the newspaper, Crypto.com claimed that their internal market maker uses the exchange like that of third-party market makers to promote effective markets with small spreads.
The cryptocurrency industry has experienced conflict of interest issues in the past. Binance’s purchase of a sizable share in Forbes for an estimated $200 million was met with dissatisfaction from critics, while Coinbase has been criticised for operating an investing division while making money on its exchange listing for the vertical. US regulators are now probing both exchanges in their latest lawsuits.
Crypto.com revealed that most of its revenue is generated from its app for retail traders. The company has also underlined that it safeguards its positions, including those on the Crypto.com exchange, by employing hedging strategies to maintain risk neutrality. Moreover, the exchange is said to provide a level playing field for institutional traders, creating fair and equitable trading opportunities.
The company has increased its visibility through sponsorships and sporting alliances, particularly commercials starring actor Matt Damon. However, Crypto.com has recently joined the list of companies exiting the United States due to regulatory pressures, winding down its institutional service citing limited demand in the current market landscape. Nevertheless, it has been granted a Major Payment Institution (MPI) license by Singapore’s regulatory body.
The information regarding Crypto.com’s internal trading procedures has brought attention to potential conflicts of interest and regulatory issues in the digital asset sector. BeInCrypto advises readers to verify facts independently and consult with a professional before making any decisions based on this content.
