Crypto.com claims that proprietary insider trading is "not a controversial practice."
In the latest development within the cryptocurrency landscape, Singapore-based exchange Crypto.com has come under scrutiny following allegations of internal trading for profit.
According to a report from the Financial Times, Crypto.com runs proprietary trading and market-making teams. It is worth noting that Financial Times cited five individuals with knowledge of the matter.
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Despite these claims, the crypto exchange holds firm that proprietary trading does not act as its primary revenue stream. Thus, it is "not a controversial practice." The company elaborated:
This market-making activity is a regulated practice, as long as there is a level playing field, i.e. all market makers have to follow the same ruleset, that assures market fairness & integrity.
This internal market-making activity includes handling its CFTC-regulated product, Up/Downs, in the United States.
However, the FT report adds fuel to the ongoing debate about potential conflicts of interest within the crypto industry, a persistent issue that has led major crypto exchanges such as FTX and Binance into legal difficulties. The crypto exchanges faced accusations of risky betting with client funds, leading to FTX's bankruptcy in November of the previous year.
It is worth noting that this scrutiny arises in the wake of the US Securities and Exchange Commission's crackdown on major crypto exchanges like Binance and Coinbase. Both companies have been targeted by lawsuits from the SEC earlier this month. The SEC's lawsuit against Binance posits that the defendants had gained billions of US dollars while putting investors' assets in a dangerous position.
Interestingly, earlier this month, Crypto.com announced its plan to scale down its institutional services for American clients. The decision came due to what the crypto firm termed as "limited demand from institutions in the US in the current market landscape."
The report casts light on potential ethical and operational dilemmas within the cryptocurrency industry, further underlining the need for robust regulatory practices.
