Binance Refutes Market Manipulation Allegations by DWF Labs
Binance has strongly denied the allegations made by DWF Labs on May 9, responding to a recent report by the Wall Street Journal (WSJ) claiming that an employee who discovered evidence of market manipulation by DWF Labs was dismissed by the platform.
According to the WSJ report, the employee and his colleagues in Binance’s market surveillance team found instances of pump-and-dump schemes and wash trading conducted by “VIP” clients, including DWF Labs, which amounted to $300 million. These activities were in violation of Binance’s terms and conditions.
The investigators recommended removing DWF Labs from the platform due to their alleged manipulation of the price of several cryptocurrencies, including the YGG token. However, Binance chose to launch an inquiry into the team’s findings, stating that there was insufficient evidence of wash trading by DWF Labs. The head of surveillance was subsequently fired, according to the WSJ.
DWF Labs, a prominent investor in crypto projects in 2023, was said to be involved in trades totaling over $4 billion per month on the Binance platform.
In response to the allegations, Binance has refuted the claims, asserting that they have a zero-tolerance policy for market manipulation. The exchange also highlighted its track record of removing high-profile traders who violated the rules, stating that it has removed over 355,000 users who breached its terms of service in the past. These ousted market makers had a combined transaction volume of $2.5 trillion.
DWF Labs, in a Telegram announcement following the WSJ report, denied engaging in price manipulation, artificial volume, and $300 million of wash trading on Binance in 2023. The market-making firm stated that the allegations were unfounded and did not accurately represent their ethical business practices. They emphasized their commitment to compliance, transparency, and diligence in their work, highlighting their successful support of over 700 portfolio companies in the crypto ecosystem.
It is worth noting that Binance settled charges brought by multiple US regulators last year, agreeing to pay a $4.3 billion settlement for alleged violations, including operating an unregistered exchange, insufficient controls over market manipulation, and commingling of funds. As part of the settlement, Binance co-founder Changpeng Zhao (CZ) stepped down as CEO and received a four-month prison sentence, along with a $50 million fine.
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