Binance Takes Action Against Market Maker Linked to Misconduct
In a significant move, Binance, recognized as the world’s largest cryptocurrency exchange by trading volume, announced that it has “offboarded” a market maker associated with the MOVE token from Movement Labs. This decision follows the identification of ties to another market maker that was previously removed from the platform due to misconduct. Market makers play a crucial role in the trading ecosystem by providing liquidity, which facilitates smooth transactions without causing significant delays or drastic price fluctuations. They achieve this by quoting prices for both buyers (bid) and sellers (ask) while simultaneously taking the opposite side of the transactions.
According to Binance’s statement released on Tuesday, the unidentified market maker reportedly realized a profit of $38 million when the MOVE tokens were first introduced for trading on the exchange. However, rather than fulfilling its responsibilities to maintain adequate order sizes and to place balanced orders for both bid and ask prices, the market maker engaged in questionable practices by placing sell orders for 66 million MOVE tokens just one day after the token’s initial listing, while only submitting minimal buy orders.
This pattern of one-sided market-making activity is widely regarded as illicit and against trading regulations. Binance reiterated its commitment to enforcing strict compliance rules for market participants. The offending entity was officially offboarded on March 18, and both the Movement Labs and Movement Foundation teams were promptly informed about the “irregularities with their market maker,” as disclosed by Binance.
As a consequence of these actions, the implicated market maker will no longer be permitted to operate on the Binance exchange, and all profits generated from these activities have been frozen to ensure compensation for affected users. Details regarding these users will be provided at a later date. In its statement, Binance emphasized, “Any project-authorized market makers who fail to adhere to or breach such principles and rules will face further actions to protect our users.”
This development coincides with another incident at Binance, where the exchange has suspended a staff member following an internal investigation into allegations of front-running trades linked to a previous role at BNB Chain.
