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Binance Faces Allegations of Firing Employee That Flagged Market Manipulation

2 mins
Updated by Harsh Notariya
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In Brief

  • Binance allegedly fired employee for flagging market manipulation.
  • WSJ reports manipulative schemes by VIP clients at Binance.
  • Binance faces legal issues, with founder Zhao jailed recently.
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Binance, the world’s largest crypto exchange, faces allegations of dismissing an employee who reported potential market manipulation.

This development has intensified the scrutiny under which the exchange operates. It raises critical questions about its dedication to maintaining a fair trading environment.

Binance Invites Another Allegation While Its Co-Founder Faces Jail Term

The Wall Street Journal (WSJ) reported that Binance fired the head of its market surveillance team after he highlighted manipulative activities by DWF Labs. Notably, these activities included market schemes such as pump-and-dump and wash trading. Such actions contravene Binance’s terms of use and could attract severe legal consequences in traditional financial markets.

The ousted leader and his team, who hailed from the conventional finance sphere, aimed to bring Binance’s practices up to regulatory standards. Their investigations revealed that some “VIP” clients engaged in illicit trades that compromised the platform’s integrity.

Read more: Binance Review 2024: Is It the Right Crypto Exchange for You?

Responding to the allegations, in an interview with BeInCrypto, a Binance spokesperson denied any tolerance for market manipulation.

“Binance emphatically rejects any assertion that its market surveillance program has permitted market manipulation on our platform. We have a robust market surveillance framework that identifies and takes action against market abuse. Any users that breach our terms of use are off-boarded; we do not tolerate market abuse,” the Binance spokesperson told BeInCrypto.

Furthermore, Binance claims 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.

“That said, these are not decisions we take lightly. We do deep investigations, using multiple tools, and only offboard clients when there is sufficient evidence they have violated our terms of use,” Binance spokesperson further clarified.

This incident is part of a broader context of Binance’s regulatory challenges. In late 2023, the US regulators rebuked the platform for putting profits before user protection. Consequently, Binance agreed to a substantial $4.3 billion fine for breaching anti-money-laundering standards.

Moreover, Binance’s founder, Changpeng Zhao, was recently sentenced to four months in jail, highlighting the exchange’s ongoing legal issues. The US Securities and Exchange Commission (SEC) has also filed additional civil charges against Binance.

They accuse the platform of misleading US investors about its risk controls and trading practices.

WSJ claims that its report on market manipulation was compiled from thorough internal investigations and reviews of pertinent company documents and emails. It suggests that despite the surveillance team’s crucial role in regulatory compliance, their recommendations were often ignored if they conflicted with the interests of prominent clients.

Read more: Who Is Changpeng Zhao? A Deep Dive Into the Ex-CEO of Binance

The surveillance team enhanced its capabilities with new software tools that detect and prevent manipulative trading practices. Despite these advancements, if the WSJ allegations are true, Binance firing its employee casts doubt on the exchange’s commitment to transparency and fairness.

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Harsh Notariya
Harsh Notariya is a journalist and crypto expert that excels in delivering the latest Web3 and Crypto News. Previously, as a Growth Marketer at Sporty and a Community Consultant at Totality Corp, he significantly boosted community engagement and followers. Harsh also crafted engaging content for top crypto influencer Shivam Chhuneja, blending meme references for an educational yet fun experience. His versatile skills make him a notable figure in crypto journalism.