Market makers play a vital role in the crypto ecosystem, providing liquidity, ensuring efficient trading, and preventing excessive price volatility. Exchanges like Binance even incentivize market makers through dedicated programs to keep bid-ask spreads tight and order books deep, which benefits traders and projects alike.
However, recent controversies surrounding market makers raise concerns about whether they are acting as stabilizing forces or exploiting their position for massive profits at the expense of retail investors.
Web3port Controversy: A Market Maker’s Power Play?
Market makers continuously place buy and sell orders, ensuring traders can execute transactions without significant price fluctuations. Without market makers, liquidity would be lower, spreads would be wider, and price slippage would be more severe, making trading riskier.
Binance, the world’s largest exchange by trading volume metrics, runs a Market Maker Program. The project rewards participants for maintaining high liquidity and preventing projects from falling below exchange requirements, potentially avoiding delisting.
“Market Makers will be given a composite score based on their performance across the various pairs,” Binance said in 2019.
Meanwhile, recent investigations have unveiled a shocking case involving Web3port. The market maker is linked to multiple projects on Binance, including GoPlus Security (GPS), Myshell (SHELL), and Movement (MOVE).
Crypto analyst Jason Chen alleged that Web3port amassed an astonishing $38 million in profits from just one project while retail investors suffered major losses.
“..it is basically confirmed that the market makers of Goplus, Myshell, and Movement, which were recently investigated by Binance, are all the same Web3port.What is jaw-dropping is how a market maker with such behavior can have the strength to sign so many projects in succession. And what is even more terrifying is that it actually made 38 million US dollars on just one project,” Chen stated.
According to Chen, this profitability is too exaggerated, with the entire crypto circle working for market makers. The controversy escalated when Binance took action against Web3port’s market-making activities.
The exchange disclosed that a market maker for the Movement (MOVE) project engaged in suspicious trading. Specifically, it dumped 66 million MOVE tokens a day after launch while placing few buy orders. This resulted in sharp price declines that harmed retail investors.
As a result, Binance froze the market maker’s earnings and delisted it from the platform. It also required the MOVE project to compensate affected users.
“It feels like Binance is now sharpening its knife to attack market makers, killing big players and dividing land,” Chen added.
Delayed Action: Was Binance Complicit?
Despite Binance’s recent crackdown on rogue market makers, questions remain about why the exchange took four months to address these issues. Colin Wu, the respected blockchain journalist behind Wu Blockchain, noted that while tens of millions of dollars worth of tokens were offloaded in December 2024, Binance only publicly addressed the misconduct in March 2025.
“How could Binance not have noticed that tens of millions of dollars were wasted in December? If it was a wrong behavior, why didn’t they punish it at the time? Why didn’t they disclose it 4 months later?” Wu posed.
Some speculate that Binance may have benefited from the heightened trading activity caused by these market makers. Higher volatility increases trading volumes, generating more fee revenue for exchanges.
Wu questioned whether Binance knew these irregularities but only acted when scrutiny intensified.
Meanwhile, Binance has a history of market-making controversies, including a 2023 lawsuit from the US SEC (Securities and Exchange Commission). The regulator accused the exchange of facilitating wash trading through market maker Sigma Chain.
This case resulted in Binance paying a $4.3 billion fine. Given the regulatory crackdown, Binance’s recent actions against Web3port and others might be an effort to clean up its operations and avoid further legal troubles.
Elsewhere, market makers have also been implicated in the collapse of major projects. Speculation has it that a large market maker contributed to the downfall of Terraform Labs. The depegging of Terra’s UST stablecoin in 2022 was allegedly linked to coordinated sell-offs, raising concerns about the unchecked power of market makers in the crypto space.
While market makers are essential for liquidity, their ability to manipulate prices and amass massive profits raises ethical concerns. Are they stabilizers of the market or hidden manipulators extracting profits at the expense of unsuspecting traders?
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