Binance accused of firing whistleblower for internal market manipulation report Binance accused of firing whistleblower for internal market manipulation report
Binance faces allegations of dismissing its market surveillance head after he reported potential manipulation by major client, despite the exchange's claims of strict surveillance and zero tolerance for abuse.
2 min read
Updated: May. 9, 2024 at 12:49 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
The Wall Street Journal published an exclusive report on May 9 alleging that Binance, the world’s largest crypto exchange, fired the head of its market surveillance team after he raised concerns about potential market manipulation by a high-profile client.
According to former Binance insiders interviewed by the Journal, the surveillance team had detected suspicious trading activity by DWF Labs, a firm run by a “Lamborghini-loving crypto trader” that had rapidly become one of Binance’s top clients. The team’s investigation concluded that DWF had engaged in pump-and-dump schemes and wash trading on Binance, violating the exchange’s terms of use.
However, when the surveillance team reportedly submitted a report recommending DWF’s removal from the platform, Binance leadership rejected the findings and fired the team’s head, the Journal reports. Several other investigators were subsequently laid off or quit voluntarily.
In response to the Journal’s reporting, Binance issued a statement on X affirming its “strict market surveillance program” and stating it does not tolerate market abuse. The exchange said that over the last three years, it has offboarded nearly 355,000 users with a transaction volume of more than $2.5 trillion for violating its terms of use.
Binance added that “market maker competition is fierce,” its investigation team’s job is to be “neutral and look at the evidence without any bias, including bias that might come from market-making firms’ claims against their competitors.”The company said it aims to ensure healthy competition and protect users from manipulation.
DWF Labs also responded to what it called “unfounded” allegations that “distort the facts.”The firm stated it “operates with the highest standards of integrity, transparency, and ethics” and remains committed to supporting its over 700 partners across the crypto ecosystem.
The allegations come as Binance faces increasing regulatory scrutiny. In 2023, the exchange pleaded guilty to violating US anti-money laundering requirements and agreed to pay $4.3 billion in fines. Founder Changpeng Zhao also stepped down as CEO and was sentenced to four months in jail.
The Securities and Exchange Commission also filed civil charges accusing Binance of misleading US investors about its risk controls and trading practices. Earlier reporting by the Journal tied Zhao to two trading firms that operated on Binance’s US arm and raised concerns about their activity’s independence and compliance oversight.
The dismissal of the whistleblower and his team raises further questions about Binance’s commitment to preventing market abuse and manipulation on its platform. While the exchange maintains it does not favor any users and prioritizes platform safety, the Journal’s reporting suggests it has, at times, put the interests of profitable clients ahead of market integrity concerns raised by its own investigators.
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Liam 'Akiba' Wright
Also known as "Akiba," Liam Wright is a reporter, podcast producer, and Editor-in-Chief at CryptoSlate. He believes that decentralized technology has the potential to make widespread positive change.
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Binance
Binance is a global cryptocurrency exchange that provides a platform for trading more than 100 cryptocurrencies.
Changpeng Zhao, popularly known as “CZ,” is a notable figure in the cryptocurrency world, primarily for founding and leading Binance, the world’s leading cryptocurrency exchange by trading volume.