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- Binance fires surveillance head following his findings of VIP client involvement in market manipulation.
- Investigations by the ousted team suggest that DWF Labs engaged in over $300 million in wash trading.
- Binance defends the controversial transactions as proprietary trading.
VIP clients of Binance, who account for two-thirds of its trading volume, have been implicated in manipulative trading practices. According to the Wall Street Journal, the leading crypto exchange platform fired the head of its market surveillance team after he uncovered manipulative trading by VIP client DWF Labs.
The dismissed head of surveillance and his team of traditional finance experts were working towards aligning Binance’s operations with regulatory standards. Their investigations uncovered that certain VIP clients were involved in illicit trading practices such as pump-and-dump schemes and wash trading.
For instance, last summer, the surveillance team’s investigations led to the expulsion of the Tron Foundation from the Binance platform. They also recommended the removal of DWF Labs after uncovering evidence of price manipulation involving the YGG token and at least six other cryptocurrencies.
Moreover, the team alleged that DWF engaged in over $300 million worth of wash trading throughout 2023 and sold nearly 5 million tokens in two separate transactions at peak prices. However, DWF Labs has denied any wrongdoing, labeling the reports as baseless and misleading.
Remarkably, the head of Binance’s VIP client division raised objections about the surveillance team’s investigations. Also, the compliance department sided with the VIP concerns and cited a lack of sufficient evidence against DWF Labds.
Essentially, Binance has defended the transactions flagged by the surveillance team as proprietary trading, denying that they constituted market manipulation. Upon sacking the individual who headed the investigation, the exchange justified the dismissal by alleging that he collaborated inappropriately with DWF’s competitors. They claim the collaboration tainted the investigation.
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