Binance fires investigator for exposing market manipulation with DWF Labs — WSJ

Binance
has
reportedly
fired
a
member
of
its
market-surveillance
team
who
uncovered
evidence
of
market
manipulation
by
DWF
Labs,
one
of
the
exchange’s
high-profile
clients.

According
to
a
Wall
Street
Journal

report,
the
dismissed
employee
and
his
colleagues
had
identified
instances
of
pump-and-dump
schemes
and
wash
trading
by
“VIP”
clients,
including
DWF
Labs.

The
market-surveillance
team,
which
was
hired
to
identify
signs
of
market
manipulation
and
other
illicit
activities
as
part
of
Binance’s
efforts
to
improve
its
compliance
practices,
found
that
“VIP”
clients
–
those
trading
more
than
$100
million
per
month
–
were
engaging
in
activities
prohibited
by
Binance’s
terms
and
conditions.

DWF
Labs,
a
prolific
investor
in
crypto
projects
that
emerged
in
early
2023,
was
reportedly
making
over
$4
billion
in
monthly
trades
on
the
exchange.

Binance
has
denied
the
claims,
stating
that
it
rejected
allegations
of
permitting
market
manipulation
and
that
the
employee
was
dismissed
after
an
inquiry
found
the
accusations
against
the
client
were
not
“fully
substantiated.”

“Binance
emphatically
rejects
any
assertion
that
its
market
surveillance
program
has
permitted
market
manipulation
on
our
platform,”
a
spokesperson
from
the
exchange
said.

DWF
Labs
also
responded
to
the
article,
claiming
that
the
allegations
were
“unfounded
and
distort
the
facts.”

“It
has
come
to
our
attention
that
a
recent
article
contains
many
allegations
that
we
believe
to
be
unfounded
and
that
do
not
accurately
represent
our
ethical
business
practices,”
DWF
Labs
said
in
an
announcement
through
its
Telegram
channel.

The
investigators
submitted
a
report
alleging
that
DWF
Labs
had
manipulated
the
prices
of
several
tokens
through
$300
million
worth
of
wash
trades
in
2023.
However,
Binance
determined
that
there
was
insufficient
evidence
of
market
abuse,
the
WSJ
report
states.

A
specific
token
linked
to
Web3
gaming,
YGG,
was
named
alongside
six
other
tokens.
YGG
is
a
token
launched
by
Yield
Guild
Games,
a
Web3
firm
which
has
key
leadership
from
the
Philippines,
where
Binance
is

currently
banned.

A
recent
statement
from
Binance
further
said
that
it
was
“unaware”
of
the
documents,
arguing
that
these
allegations
were
“very
concerning”
if
proven
to
be
true.
The
exchange’s
founder,
Changpeng
Zhao,
has
been

sentenced
to
four
months
in
prison
after
the
exchange
was
embroiled
in
a
series
of
legal
battles.