Binance Fired Employee Who Found Evidence Of DWF Labs’ Inappropriate Activity — Report

LUCKNOW (CoinChapter.com) — Binance is facing serious allegations of tolerating market manipulation by a major trading firm, DWF Labs. According to the report, Binance’s own internal investigators found evidence against DWF’s inappropriate trading activity. The firm was engaged in pump-and-dump schemes, wash trading, and other manipulative tactics. It made over $300 million in trades in 2023.

The allegations came from findings by Binance’s market surveillance team, created in 2022. The team is responsible for detecting and preventing manipulative trading practices on the exchange. This team of investigators, many hired from traditional finance backgrounds, reportedly uncovered rampant manipulation by some “VIP” trading clients like DWF Labs.

Is Binance Neglecting And Supporting Suspicious Trading?

The report states that Binance’s Oversight Team determined that DWF Labs manipulated the prices of at least seven different cryptocurrencies, including the YGG token. They found DWF conducted over $300 million in illegal wash trades, where traders trade between their own accounts to inflate volumes artificially.

Despite this evidence, Binance did not take any action. When the Oversight Team recommended removing DWF Labs from the platform, Binance reportedly rejected the request. Just a week later, Binance fired the head of its Oversight Team.

DWF Labs Denies Market Manipulation Claims

In response to the allegations, DWF Labs issued a statement calling the claims “unfounded” and stating they operate with “the highest standards of integrity, transparency and ethics.”

To 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

— DWF Labs (@DWFLabs) May 9, 2024

However, previous reporting suggests DWF pitched clients on services to create “artificial volume” and drive up token prices.

Binance has stated it takes market manipulation seriously, with a spokesperson claiming:

“We have a robust market surveillance framework that identifies and takes action against market abuse.”

The exchange says it has removed nearly 355,000 users for violations over the past three years.

While not directly addressing the dismissal of its head of market surveillance, Binance responded on X.

In 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…

— Binance (@binance) May 9, 2024

The accusations against Binance highlight the ongoing challenges of preventing market manipulation and maintaining fair, transparent trading in the massive but lightly regulated crypto markets. Practices like wash trading, spoofing, front-running, and pump-and-dump schemes are rampant, undermining market integrity.

Binance had already paid over $4 billion in fines last year for anti-money laundering violations. Tolerating manipulation could invite further regulatory scrutiny and penalties. With founder Changpeng Zhao recently sentenced to jail time, the exchange faces pressure to ramp up compliance and oversight.

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