Binance Refutes Market Manipulation Allegation by DWF Labs
Binance is pushing back against the recent accusation made by DWF Labs on May 9. This comes after a groundbreaking report from the Wall Street Journal (WSJ) revealed that Binance had fired an employee who discovered evidence of market manipulation by DWF Labs, a prominent player on the trading platform.
According to the WSJ report, the dismissed employee, along with his colleagues in Binance’s market surveillance team, had identified instances of pump-and-dump schemes and wash trading carried out by “VIP” clients, including DWF Labs, which amounted to $300 million. These activities were in direct violation of Binance’s terms and conditions.
The investigators recommended removing DWF Labs from the platform, as they were accused of manipulating the prices of several cryptocurrencies, including the YGG token. However, instead of taking action against DWF Labs, Binance initiated an investigation into the team’s findings, claiming that there was insufficient evidence of wash trading. As a result, the head of surveillance was fired, according to the WSJ.
DWF Labs, an investor in crypto projects that gained significant attention in 2023, was reportedly involved in trades worth over $4 billion per month on the Binance platform.
In response to the allegations, Binance vehemently denied the claims and emphasized its zero-tolerance policy towards market manipulation. The exchange also highlighted its track record of removing high-profile traders who violated the rules, stating that it had already removed more than 355,000 users who had breached its terms of service, with a combined transaction volume of $2.5 trillion.
DWF Labs promptly released a statement on Telegram, refuting the allegations made in the WSJ report. The market-making firm stated that it believed the allegations were unfounded and did not accurately represent its ethical business practices. DWF Labs emphasized its commitment to its partners and the wider community, stating that it had successfully supported over 700 portfolio companies in the crypto ecosystem while maintaining compliance, transparency, and diligence in its work.
It is worth noting that last year, Binance reached a settlement with multiple US regulators, agreeing to pay $4.3 billion for alleged violations, including operating an unregistered exchange, inadequate controls over market manipulation, and commingling of funds. The US Securities and Exchange Commission’s litigation against Binance led to a plea deal and the aforementioned settlement. As part of the agreement, Binance co-founder Changpeng Zhao (CZ) stepped down as CEO and was sentenced to four months in prison, along with a $50 million fine.
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