The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, says cryptocurrency exchanges are “trading against their customers often because they’re market-marking against their customers.” He has raised concerns over crypto trading platforms “commingling” services.
SEC Chairman Gary Gensler said in an interview with Bloomberg News Tuesday that some cryptocurrency exchange platforms may be betting against their own customers.
Gensler expressed concerns that crypto exchanges are not segregating different parts of their businesses, such as trading, custody, and market-making. He warned that the “commingling” of services may hurt customers.
Noting that the problem of “platforms trading ahead of their customers” is widespread in the crypto space, the SEC chair asserted:
In fact, they’re trading against their customers often because they’re market-marking against their customers.
The SEC chief also raised issues with stablecoins, emphasizing that the three largest stablecoins are affiliated with crypto exchanges. Tether (USDT) is affiliated with Bitfinex, USD Coin (USDC) is linked to Circle, and Binance USD (BUSD) is connected to Binance.
Chair Gensler opined:
I don’t think that’s a coincidence. Each one of the three big ones were founded by the trading platforms to facilitate trading on those platforms and potentially avoid AML and KYC.
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