- Crypto.com’s implementation of internal teams for token trading has raised concerns.
- The company reportedly runs its own proprietary trading and market-making teams, deviating from the typical practice of outsourcing.
- Crypto.com provided strong denials of trading involvement and allegedly instructed employees to deny the existence of an internal market maker operation.
According to a recent report, the Singapore-based crypto platform Crypto.com implemented dedicated internal teams to engage in token trading with the aim of generating profits, raising concerns in the community.
The report reveals that, as per five insiders, Crypto.com runs its own proprietary trading and market-making teams, which are typically handled by distinct private entities. Reporter Collin Wu took to Twitter to share the revelations:
FT: The crypto Exchange Cryptocom operates internal proprietary trading and market making teams to be the customers’ counterparty to improve order book liquidity for transactions and ran as a broker model. Cryptocom executives gave other, external trading houses “absolutely in…— Wu Blockchain (@WuBlockchain) June 19, 2023
One of the insiders stated that executives at Crypto.com allegedly provided strong sworn statements to external trading houses, affirming that Crypto.com had no involvement in trading.
As per one insider familiar with the company’s practices, the proprietary trading desk at Crypto.com allegedly engages in trading activities on both the company’s own exchange and other platforms. Their primary objective is reportedly to generate profits rather than facilitate exchange services, as noted by one source.
Additionally, the insiders alleged that Crypto.com’s market-making desk aims to enhance liquidity on the platform. One of the sources indicated that employees were instructed to deny the existence of any internal market maker operation.
Crypto.com responded to these allegations, acknowledging:
We have an internal market maker that operates on the Crypto.com exchange and that internal market maker is treated exactly the same as third-party market makers that identically facilitate tight spreads and efficient markets on our platform.
In a statement, the crypto exchange revealed that a portion of its revenues originates from its app designed for retail traders. The company added that its trading team was responsible for maintaining risk neutrality by hedging these positions across multiple platforms.
In addition, Crypto.com underscored that all participants on the platform, including market makers, are treated with equal importance. They explicitly stated that the company does not rely on proprietary trading as a revenue stream.
Recently, Singapore’s MAS granted Crypto.com the Digital Payment Token License, at a time when the U.S Securities and Exchange Commission (SEC) is strongly targeting even top crypto players such as Binance and Coinbase (NASDAQ:COIN).
Following the SEC’s enforcement actions, the company made an announcement to the media that its exchange catering to institutional traders in the United States would be ceasing operations starting from June 21, 2023.
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