Binance’s investigative team alleges it discovered that market maker DWF Labs was involved in market manipulation.
The Wall Street Journal (WSJ) reported that DWF Labs’ alleged fictitious trading was discovered during an internal investigation using proprietary software tools. When the discovery was presented to the DWF Labs’ management, the exchange fired the head of the supervisory service.
After the U.S. SEC filed a lawsuit against Binance and its founder, Changpeng Zhao, in 2023, the exchange promised to strive to build a secure and reliable platform continuously. To do this, the company hired investigators from the traditional financial sector.
During the study, the group identified VIP clients involved in market manipulation. The report stated that top traders accounted for two-thirds of the total trading volume on the platform.
Additionally, Binance noticed that accounts were trading certain cryptocurrencies. According to former company insiders, no response was received when DWF Labs was asked who controlled the addresses.
The report notes that in 2022, DWF Labs invited potential clients to use an active trading position to increase token prices and create artificial volume on exchanges. WSJ also added that the market maker confirmed that it had created an artificial trading volume for one of its clients.
DWF Labs called the accusations unfounded and that it distorted facts.
Binance, in a commentary on the article, stated that it strictly adheres to market supervision and prevents abuse. According to statistics, over three years, the exchange disconnected about 355,000 users with a transaction volume of more than $2.5 trillion for violating the terms of use.
In April 2023, the market maker was suspected of dumping tokens of its portfolio projects worth at least $65 million. Projects included raising funds for an ICO for a project that was never launched, unprofitable management of the investment portfolio, and the company’s connection with OneCoin. OneCoin’s cryptocurrency pyramid scheme bilked users out of $4.4 billion.
