The crypto world is buzzing after a report by the Wall Street Journal (WSJ) that claimed wash trading and market manipulation on the leading exchange Binance. The report focuses on accusations against some of Binance’s high-volume clients, specifically those with over $100 million in monthly trading activity.
According to the WSJ’s sources, these VIP clients contribute a significant portion of Binance’s business, accounting for approximately two-thirds of the exchange’s total trading volume. This raises concerns about potential manipulation, especially in light of Binance’s 2022 initiative to establish a dedicated surveillance team to combat such activities.
The report further claims that this surveillance team identified hundreds of users for removal, including the prominent crypto firm DWF Labs. The WSJ alleges that DWF not only manipulated the prices of tokens like Yield Guild Games (YGG) but also conducted a staggering $300 million worth of wash trades on the platform in 2023.
The most concerning aspect of the WSJ report is the alleged inaction by Binance. Instead of addressing the surveillance team’s findings, the report claims that the exchange fired the team leader just a week later. According to the WSJ, the justification provided by the exchange’s compliance unit is even more unsettling, as they reportedly suspected the team leader of collaborating with DWF’s competitors.
Binance Denies Allegations, DWF Labs Maintains Innocence
Binance quickly responded to these accusations. In a recent online post, the cryptocurrency exchange reiterated its commitment to closely monitoring the market and outlined its efforts to prevent market manipulation over the years.
Emphasizing its strict policy, the exchange highlighted the removal of nearly 355,000 users who broke their rules. These users, who had a combined trading volume of $2.5 trillion, were banned from the platform in the past three years.
The exchange acknowledged that the market-making process can be competitive but stressed that its compliance team carefully and fairly analyzes evidence before taking action. Additionally, the exchange reaffirmed its dedication to promoting fair competition and protecting its users from manipulative practices.
DWF Labs also chimed in, vehemently denying the WSJ report’s claims. They characterized the report as “unfounded” and a distortion of facts. The company maintains that it operates with the utmost transparency, integrity, and ethical standards.
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