The reputable Singapore-based cryptocurrency exchange Crypto.com has reportedly raised eyebrows with its use of internal teams to trade tokens for profit. According to an article in the Financial Times, the platform has proprietary trading and market-making teams, leading to concerns that there may be conflicts of interest at play. While some insiders claim the company previously enforced denial of such practices, Crypto.com denies ordering employees to lie about any internal market-making operations.
The platform clarified that it does indeed have an internal market maker, which operates on its exchange and is treated equally to third-party market makers, with the same goals of improving liquidity and facilitating tight spreads for an efficient market. On the other hand, Crypto.com’s proprietary trading team, which is responsible only for making money, appears to challenge the premise of maintaining a level playing field for all participants on the platform.
In conventional markets, exchanges are tasked with matching buyers and sellers at competitive transparent prices. However, market-making and proprietary trading are typically done by separate private firms, preventing conflicts of interest. Reports now suggest that Crypto.com’s proprietary trading desk is active on both the company’s exchange and other platforms – a startling revelation that raises questions about the fairness of the platform.
Crypto.com assured that it does not rely on proprietary trading as a revenue source and is dedicated to improving liquidity and lowering spreads for an efficient market. Nonetheless, the exchange is now facing increased scrutiny with the potential conflicts of interest coming to light.
Regulatory agencies such as the Securities and Exchange Commission (SEC) have long expressed concerns about the risks of market manipulation within the cryptocurrency industry. For instance, Binance, the world’s largest crypto exchange, has also faced multiple charges related to manipulative trading and conflicts of interest. These charges included using a trading firm owned by CEO Changpeng Zhao to artificially inflate the platform’s trading volume. Despite settling on a compromise that avoided the freezing of assets, the accusations against Binance have cast a shadow over other major players in the industry, including Crypto.com.
In conclusion, while Crypto.com denies any wrongdoing and stresses its commitment to fair and equal treatment of platform participants, accusations of potential conflicts of interest are raising concerns among users and investors alike about the transparency and impartiality of major cryptocurrency exchanges. In an industry battling for widespread acceptance and mainstream adoption, the resolution of these issues will be crucial in shaping its future.
Source: Cryptonews
