Crypto exchange Binance banned a market maker for GoPlus Security (GPS) and the project MyShell (SHELL) over gross misconduct.
The platform even confiscated proceeds from the market maker to compensate affected users of $GPS and $SHELL.
Binance will reveal its compensation plan in the coming days
According to Binance, it’s prepared to act against market makers that fail to comply with its policies, which became very clear with the latest incident.
One of Binance’s market makers, a single market-making entity for the $GPS token, was found coincidingly participating in $SHELL’s market activities, violating the exchange’s policies. Thus, the crypto exchange quickly offboarded the market maker and even permanently banned any future market participation.
Additionally, the exchange confiscated all the funds the market maker received from its non-compliant activities, saying that they would use the proceeds to pay back affected token $GPS and $SHELL token holders.
However, the exchange has yet to disclose how all affected users will be properly compensated.
Nevertheless, it said that it would release its compensation plan in the next few days, detailing eligibility criteria, distribution mechanisms and timelines.
A Binance representative commented on the matter, saying, “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 even insisted that all its project market makers needed to comply with its rules, including providing bids and asks in tandem with the market size of each security, maintaining a stable spread for market activity as well as preventing market disruption from high-frequency order placement and cancellations.
Binance revealed a new mechanism for listing and delisting despite GPS troubles at the time
On Friday, the crypto exchange announced new listing and delisting rules, which included putting the entire process up for community vote.
The exchange explained that users with more than 0.01 BNB will now be allowed to ‘Vote to List’ or ‘Vote to Delist’ the exchange’s tokens. However, the platform still reserves the right to choose the tokens being voted on.
However, the GPS ecosystem was still under close observation at the time of the announcement.
Just a few days after its listing, the GPS token was under the Monitoring tag, with the exchange concerned over its sudden price dips and what they thought to be intentional price manipulation. The exchange later discovered that a market maker caused the price drop when he quickly sold roughly 70 million tokens, siphoning about $5 million in liquidity from the market.
The exchange even detailed that the market maker failed to place matching buy orders, thus contributing to losses for early traders. At the time, Binance only put the market maker’s account on hold.
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Source: https://www.cryptopolitan.com/binance-bans-market-maker-for-misconduct/