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.
— DWF Labs (@DWFLabs) May 9, 2024To our valued partners: We want to clarify that many recent allegations reported in the press are unfounded and distort the facts.
DWF Labs operates with the highest standards of integrity, transparency, and ethics, and we remain committed to supporting you and our over 700… pic.twitter.com/aydp1hoham
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.
— Binance (@binance) May 9, 2024In response to WSJ, we affirm our strict market surveillance program. We do not tolerate market abuse.
Over the last three years, we have offboarded nearly 355,000 users with a transaction volume of more than $2.5 trillion for violating our terms of use.
Market maker…
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.
— Nay (@gmnay_) April 10, 20231/ Who the heck is DWF Labs?
In the last couple of months, they have been everywhere, throwing ridiculous checks at everyone from legit projects to dead ones.
I dug a bit into on-chain data and other resources, and it doesn't look good.