Binance Bans Market Maker, Seizes Funds for GPS & SHELL Compensation

Binance Takes Action Against Non-Compliant Market Maker

Binance has made it clear that it will take action against market makers who fail to comply with its policies. In this latest incident, one market-making entity was found to be involved in market activities for both the $GPS and $SHELL tokens, violating Binance’s rules. As a result, the exchange swiftly offboarded the market maker and issued a permanent ban, preventing them from participating in future market activities.

• The market maker violated Binance’s policies by participating in multiple token markets.
• Binance confiscated funds from the market maker’s non-compliant activities to compensate affected users.

Compensation Plan and Timeline

While Binance has yet to fully disclose the details of its compensation plan, the exchange has confirmed that it will reveal the plan in the coming days. The compensation plan will include:

• Eligibility criteria for affected users
• Details on the distribution mechanisms
• Timelines for the distribution process

Binance emphasized its commitment to protecting users and maintaining a fair trading environment. A Binance representative stated, “Protecting our users and maintaining a fair trading environment remain our top priorities. This incident underscores our proactive approach to identifying and addressing misconduct, and we will continue to enhance our monitoring systems to prevent future breaches.”

Binance’s Market Maker Rules

Binance has reiterated that all project market makers must adhere to the platform’s rules, including:

• Providing bids and asks aligned with the market size of each security.
• Maintaining a stable spread for market activity.
• Preventing market disruptions caused by high-frequency order placement and cancellations.

These rules are designed to ensure fair market practices and prevent price manipulation or disruption, as seen in the case of the $GPS token.

New Listing and Delisting Rules Announced

On Friday, Binance introduced new listing and delisting rules, which will now be put to a community vote. Users with more than 0.01 BNB will be able to vote to list or delist tokens. However, Binance retains the right to choose which tokens are put up for vote. Despite these new rules, the GPS token was still under close observation at the time of the announcement.

GPS Token Under Investigation

Just days after its listing, the $GPS token was flagged under Binance’s “Monitoring” tag. The exchange raised concerns about the token’s sudden price dips, which they suspected were due to intentional price manipulation. Binance later discovered that a market maker was responsible for the price drop after selling approximately 70 million $GPS tokens, which drained about $5 million in liquidity from the market.

• The market maker failed to place matching buy orders, leading to losses for early traders.
• Binance initially placed the market maker’s account on hold but is continuing its investigation.

Despite this issue, Binance is focused on enhancing its monitoring systems and ensuring that such misconduct is addressed quickly to protect its users and maintain the integrity of its platform.