Binance has reportedly fired the researcher who uncovered the market manipulation at the client firm

With Binance founder and former CEO Changpeng “CZ” Zhao recently sentenced to four months in prison, a WSJ report alleges that the crypto exchange giant fired one of its researchers who exposed the manipulation of the market by one of the company’s customers, DWF Labs.

Binance, however, denied the report, stating that the cryptocurrency exchange maintains a strict market surveillance program that does not tolerate market abuse.

DWF allegedly involved in $300 million worth of laundering trade

According to a report in the Wall Street Journal, Binance hired a team of investigators following accusations of enabling market malpractice by financial regulators as a way to clean up the company.

The research team in one of its investigations, discovered that Binance’s VIP customers, consisting of top traders who accounted for two-thirds of the company’s total trading volume in 2023, were engaged in laundering business and pump and dump schematics.

One such VIP client allegedly involved in market manipulation was market maker DWF Labs, which was previously charged with the same offense in 2023.

DWF Labs did a minimum of $4 billion in trades per month. According to the WSJ article, which cited current and former Binance employees as sources, in addition to reviewing emails and key documents, DWF Labs proposed to its clients that it could “increase” token prices and create “volumes artificial” to the exchange. and other platforms, in a way that would attract merchants.

Binance researchers discovered that DWF Labs helped manipulate the price of the Yield Guild Game (YGG) token and six others, processing $300 million in laundering operations in 2023.

However, when the watchdog team sent reports of DWF’s activities to Binance, the crypto exchange fired the head of the project a week after its submission. Speaking to the WSJ, a Binance executive said the researcher was fired after an internal investigation revealed that the allegations against DWF Labs were “not fully substantiated.”

Binance and DWF refute WSJ report

A Binance spokesperson stated in the article that the crypto exchange does not allow market manipulation on its platform, further stating:

“We have a robust monitoring framework that identifies and takes action against market abuse. We do not favor any individual user, no matter how big, for the safety of the platform.”

The spokesperson went on to say that the company dropped nearly 355,000 users in the past three years and pleaded guilty to violating Binance’s terms of use, with a transaction volume of $2.5 trillion.

In one X postThe crypto exchange stressed that the company was intolerant of market abuse, adding that:

“Competition from market makers is fierce and it is our research team’s job to be neutral and look at the evidence without any bias, including bias that might come from claims made by market makers against their competitors . We aim to ensure healthy competition in the industry and always fight to protect our users from market manipulation.”

DWF Labs too denied the claims made in the WSJ article, stating that the allegations were “baseless” 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 700+ partners across the crypto ecosystem.”

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