In the latest signs of a potential conflict, reports have emerged that crypto trading platform Crypto.com has deployed its internal teams to trade tokens for profits.
The Singapore-based exchange, also one of the top-10 crypto trading marketplaces, is operating proprietary trading as well as market-making teams, said five people familiar with the matter to Financial Times.
In most markets, separate private companies are behind market-making and prop trading activities. Also, the exchanges here match the buyers with the sellers at the most competitive and transparent price. However, the US regulators have started clamping down on exchanges that support internal market-making activities.
Earlier this month, the US Securities and Exchange Commission (SEC) charged crypto exchange Binance for using a trading firm operated by chief executive Changpeng Zhao and engaging in “manipulative trading that artificially inflated the platform’s trading volume.
Ever since Crypto.com‘s launch in 2016, there hasn’t been much talk about internal trades at the exchange. However, one source with direct knowledge said that Crypto.com executives gave other, external trading houses “absolutely dramatic sworn statements that Crypto.com was in no way involved in trading”.
“As such, the Crypto.com trading team ensures that Crypto.com is risk neutral by hedging these positions on a number of venues, including the Crypto.com exchange”. It further added that it “operates as a level playing field trading venue”.
However, sources said that Crypto.com’s proprietary trading desk trades on both – the company’s own exchange and other venues. The sources said that the market-making desk at Crypto.com tries to boost liquidity on the venue. One person said that the proprietary trading team has the sole goal of making money and “not facilitating an exchange”.