Due to the deployment of internal trading teams, Crypto.com is facing questions about potential conflicts of interest. The digital assets industry is concerned about this technique, which involves proprietary trading and market creation.
Exchanges have traditionally connected buyers and sellers at competitive pricing. Crypto.com, on the other hand, has its own trading teams that undertake market-creating and proprietary trading responsibilities. These activities are often carried out by different private enterprises in other markets. The platform is situated in Singapore and is listed among the top ten cryptocurrency marketplaces worldwide.
Regulatory attention has been called to similar actions in the United States. This is mostly due to the Securities and Exchange Commission (SEC) recently charging Binance, the world’s largest cryptocurrency exchange. Allegations of manipulative trading and overstated trading volume were among the charges.
Until previously, the presence of internal trading teams at Crypto.com was not well recognized. Some people with intimate knowledge of the situation say that Crypto.com executives misled an external trading company. This implies that the corporation was not involved in any trading activity. Crypto.com, on the other hand, has refuted these charges, claiming that employees were not instructed to deceive other market players.
— Walletor (@walletorapp) June 19, 2023
Crypto.com claims that its internal market maker behaves similarly to third-party market makers on its exchange. This promotes tight spreads and effective markets. The company highlights that its key source of revenue is its retail trading app. In a broker model, Crypto.com serves as the counterparty. To reduce danger, the Crypto.com trading staff hedges positions on many exchanges, including its own.
The exclusive trading desk at the company is primarily concerned with creating profits rather than enabling transactions. The market-making desk, on the other hand, seeks to increase liquidity on the platform.
While Crypto.com professes to treat all participants equally, there are still worries about potential conflicts of interest stemming from the company’s own trading teams. To maintain fair and transparent operations in the crypto business, authorities, and industry participants must closely review such practices.
All in all, Crypto.com announced the closing of its institutional exchange for US traders in response to recent regulatory enforcement efforts, citing little demand in the present market situation.