Thomas Daniels
Binance’s dedicated investigative unit has uncovered evidence suggesting that market maker DWF Labs engaged in market manipulation, employing fictitious trading strategies that came to light during an extensive internal review with advanced proprietary software tools. The discovery led to significant operational changes within DWF Labs, including the termination of its chief supervisory officer.
The allegations surfaced shortly after the U.S. Securities and Exchange Commission (SEC) launched a lawsuit against Binance and its CEO, Changpeng Zhao, in 2023. In response, Binance intensified its efforts to enhance platform security and reliability by recruiting seasoned professionals from the conventional financial sector.
The investigative team pinpointed several VIP clients who allegedly participated in manipulating the market, with these clients representing a significant portion of the platform’s trading volume. Although Binance approached DWF Labs for explanations regarding the suspicious account activities, the market maker did not provide clear answers about who managed these accounts.
In a detailed 2022 report, the Wall Street Journal highlighted that DWF Labs had previously encouraged potential clients to engage in active trading to artificially inflate token prices and generate misleading trading volumes. DWF Labs acknowledged creating artificial volumes for certain clients, intensifying the scrutiny of its practices.
Despite the mounting allegations, DWF Labs dismissed the claims as baseless and accused the media of distorting the facts. Meanwhile, Binance reaffirmed its commitment to rigorous market supervision and the prevention of any abusive practices on its platform. The exchange reported that it had deactivated approximately 355,000 user accounts over the past three years, involving transactions totaling over $2.5 trillion due to violations of its terms of service.
Further controversies involving DWF Labs emerged in April 2023 when the firm was suspected of offloading $65 million worth of tokens from its portfolio projects, which included fundraising for a never-launched ICO, mismanagement of investment portfolios, and connections to the infamous OneCoin pyramid scheme, which defrauded users of approximately $4.4 billion.
