Market makers are important actors in the trading world. They help smooth price fluctuations by continually buying and selling, even when markets are choppy. They get paid by collecting a small difference between the bid and offer price. The SEC has brought enforcement actions against trading venues that didn’t disclose they had affiliates trading on their platforms.

The SEC sometimes begins and closes probes without making allegations of wrongdoing or taking enforcement action.

The SEC originally sent a subpoena to Binance’s U.S. arm in late 2020, The Wall Street Journal previously reported.

The regulatory agency, whose mission is investor protection, has taken nearly 100 enforcement actions involving cryptocurrency.

The two trading firms being examined by the SEC, Sigma and Merit Peak, began trading cryptocurrencies on Binance.US shortly after the exchange was launched in 2019, according to former executives.

In late 2019, Mr. Zhao, on behalf of Merit, signed a document approving an infusion of capital from Merit into Binance.US in exchange for shares in the company. In the December 2020 SEC subpoena, the SEC referred to Merit as a Binance entity.