Binance employee accuses DWF Labs of market manipulation

Binance’s research team claims to have discovered that market maker DWF Labs was involved in market manipulation.

The Wall Street Journal (WSJ) reported that DWF Labs’ claims of fictitious trading were uncovered during an internal investigation using proprietary software tools. When the discovery was presented to DWF Laboratories management, the exchange fired the head of the inspection service.

After the US SEC filed a lawsuit against Binance and its founder Changpeng Zhao in 2023, the exchange promised to constantly strive to create a safe and reliable platform. To do this, the company hired researchers 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 the accounts were trading certain cryptocurrencies. According to the company’s past information, DWF Labs received no response when asked who controlled the addresses.

The report states that DWF Labs is inviting potential clients to use an active trading position in 2022 to increase token prices and create artificial volume on exchanges. The WSJ also added that the market maker confirmed that it had created an artificial trading volume for one of its clients.

DWF Labs said the accusations were false and distorted the facts.

To our valued partners: We would like to point out that many claims recently published in the press are unfounded and distort the facts.

DWF Labs operates with the highest standards of integrity, transparency and ethics, and we are committed to supporting you and our 700+ employees… pic.twitter.com/aydp1hoham

— DWF Labs (@DWFLabs) May 9, 2024

In its comment to the article, Binance stated that it strictly adheres to market controls and prevents abuses. According to statistics, over the course of three years, the exchange disconnected approximately 355,000 users for violating its terms of use, with a trading volume of more than $2.5 trillion.

In response to the WSJ, we confirm our stringent market surveillance program. We do not tolerate market abuse.

Over the last three years, we have delisted approximately 355,000 users with over $2.5 trillion in trading volume for violating our terms of use.

Market maker…

— Binance (@binance) May 9, 2024

In April 2023, the market maker was suspected of selling tokens belonging to portfolio projects worth at least $65 million. The 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 earned users $4.4 billion.

1/ Who is DWF Labs?

They’ve been everywhere for the last few months, showering everyone with ridiculous checks from legitimate projects to dead projects.

I’ve looked a bit at on-chain data and other sources and it doesn’t look very good.

— No (@gmnay_) April 10, 2023