Trading Teams at Crypto.com Exchange Raise Questions About Conflicts of Interest: FT
Crypto.com has reportedly assigned internal teams to engage in token trading for profit. This development highlights potential conflicts of interest within the digital assets industry.
Because Bitcoin
June 19, 2023
According to the Financial Times, Crypto.com has reportedly assigned internal teams to engage in token trading for profit. This development highlights potential conflicts of interest within the digital assets industry. The Singapore-based company, recognized as one of the world's top-10 crypto marketplaces, operates proprietary trading and market-making teams, according to individuals familiar with the matter. Typically, exchanges facilitate transactions between buyers and sellers, ensuring competitive and transparent prices. Market making and proprietary trading are typically conducted by separate entities in most markets.
The existence of internal traders at Crypto.com had not been widely known since the company's launch in 2016. According to sources, Crypto.com executives provided sworn statements to external trading firms, vehemently denying any involvement in trading activities. Additionally, employees were allegedly instructed to assert that there was no internal market-making operation within the company.
Crypto.com clarified to the Financial Times that their employees were not instructed to deceive market participants. They stated that their internal market maker operates similarly to third-party market makers, ensuring efficient markets. Most of their revenue comes from their retail trading app, where they act as a counterparty. Crypto.com's exchange serves institutional traders and they have a proprietary trading desk for generating profits. They also focus on market-making to enhance liquidity. The company mentioned that comparing volumes to competitors is common, as they continuously improve liquidity and reduce spreads.
Crypto.com stated that all participants on their platform are treated equally, including market makers. They clarified that proprietary trading is not a major revenue source for them. Founded by Kris Marszalek and Rafael Melo, Crypto.com has recorded significant trading volumes this year.
Following recent SEC enforcement actions, they announced the closure of their institutional US traders' exchange due to limited demand in the current market landscape.
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