Binance bans market makers for violations, prepares compensation plan

Jakarta, Pintu News – Binance, one of the world’s largest crypto exchanges, has banned a market maker for serious violations related to GoPlus Security (GPS) and MyShell (SHELL) tokens. In addition to the permanent ban, Binance is also confiscating profits made from activities that do not comply with platform policies and will use them to compensate affected users.

According to Binance’s official statement, the market maker was involved in market manipulation in violation of the exchange’s rules. The entity responsible for GPS market making was found to be simultaneously participating in SHELL market activities, which is a violation of Binance’s policies. As a result, this market maker was immediately removed from the platform and banned from participating in future trades.

Compensation Plan for Affected Users

In order to protect investors and maintain a fair trading environment, Binance promises to compensate for the losses suffered by GPS and SHELL users. Funds seized from market makers will be used as a source of compensation.

However, Binance has not provided exact details on the compensation mechanism. In the next few days, the exchange plans to announce a compensation plan that includes eligibility criteria, distribution method, and payment schedule.

A Binance representative stated, “Protecting our users and maintaining a fair trading ecosystem remains a top priority. This incident confirms our proactive approach in identifying and addressing violations. We will continue to improve our monitoring system to prevent future breaches.”

In addition, Binance emphasized that all market makers operating on its platform must adhere to strict rules, including maintaining price stability, providing sufficient liquidity, and avoiding market disruption due to excessive high-frequency trading activity.

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Binance’s New Rules for Listing and Delisting Tokens

In addition to taking action against market makers who violate the rules, Binance has also introduced a new mechanism for the tokenlisting anddelisting process. The exchange now gives the community the opportunity to vote on the process.

From now on, users who own more than 0.01 Binance Coin (BNB) can vote in the “Vote to List” or “Vote to Delist” scheme to determine the tokens available on the platform. However, Binance retains the final authority in selecting the tokens that the community can vote for.

This decision comes amidst intense scrutiny of the GPS ecosystem. Just days after the GPS listing, Binance flagged the token with a Monitoring label as it experienced a drastic price drop allegedly caused by market manipulation.

Binance discovered that the relevant market maker sold around 70 million GPS tokens in a short period of time, draining the market liquidity by $5 million. In addition, the market maker failed to place appropriatebuy orders, causing losses to early traders. As a first step, Binance briefly froze the market maker’s account before eventually taking permanent ban action.

Conclusion

Binance’s crackdown on abusive market makers demonstrates its commitment to maintaining a healthier and more transparent crypto trading ecosystem. While compensation plans for GPS and SHELL users are still being finalized, Binance continues to work on improving market policies, including giving the community a greater role in determining which tokens to list or delist.

With stricter oversight and clearer internal regulations, Binance hopes to reduce market manipulation practices that harm investors and strengthen user confidence in its platform.

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Reference

• Cryptopolitan. Binance Bans Market Maker for Misconduct. Accessed March 10, 2025.
• Featured Image: Generated by AI