Binance’s investigative team has uncovered market manipulation involving market maker DWF Labs. The Wall Street Journal reported that DWF Labs’ fictitious trading activities were detected during an internal investigation using proprietary software tools. Following the discovery, DWF Labs’ management terminated the head of the supervisory service.

After the U.S. SEC filed a lawsuit against Binance and its founder, Changpeng Zhao, in 2023, the exchange committed to enhancing platform security and reliability. To achieve this, the company enlisted investigators from the traditional financial sector.

During the investigation, VIP clients implicated in market manipulation were identified. The report indicated that top traders contributed to two-thirds of the total trading volume on the platform. Additionally, accounts trading specific cryptocurrencies were noticed, with no response received when inquiring about the controller of the addresses.

The report revealed that in 2022, DWF Labs encouraged potential clients to use active trading positions to inflate token prices and generate artificial volume on exchanges. The market maker also admitted to artificially inflating trading volume for a client.

DWF Labs denied the allegations, claiming they were baseless and distorted. Binance emphasized its commitment to market supervision and prevention of abuse, citing that over three years, the exchange had removed approximately 355,000 users with a transaction volume exceeding $2.5 trillion for violating terms of use.

In April 2023, DWF Labs was suspected of offloading tokens from its portfolio projects worth at least $65 million. Projects included an ICO for an unlaunched project, mismanagement of investment portfolios, and association with OneCoin, a cryptocurrency pyramid scheme that defrauded users of $4.4 billion.

Twitter users expressed concerns over DWF Labs’ activities, with some questioning the legitimacy of their actions. Binance’s Investigations team also played a role in the apprehension of a ZKasino scam suspect.

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