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Binance has reportedly fired a member of its market-surveillance team who uncovered evidence of market manipulation by DWF Labs, one of the exchange’s high-profile clients.

According to a Wall Street Journal report, the dismissed employee and his colleagues had identified instances of pump-and-dump schemes and wash trading by “VIP” clients, including DWF Labs.

The market-surveillance team, which was hired to identify signs of market manipulation and other illicit activities as part of Binance’s efforts to improve its compliance practices, found that “VIP” clients – those trading more than $100 million per month – were engaging in activities prohibited by Binance’s terms and conditions.

DWF Labs, a prolific investor in crypto projects that emerged in early 2023, was reportedly making over $4 billion in monthly trades on the exchange.

Binance has denied the claims, stating that it rejected allegations of permitting market manipulation and that the employee was dismissed after an inquiry found the accusations against the client were not “fully substantiated.”

“Binance emphatically rejects any assertion that its market surveillance program has permitted market manipulation on our platform,” a spokesperson from the exchange said.

DWF Labs also responded to the article, claiming that the allegations were “unfounded and distort the facts.”

“It has come to our attention that a recent article contains many allegations that we believe to be unfounded and that do not accurately represent our ethical business practices,” DWF Labs said in an announcement through its Telegram channel.

The investigators submitted a report alleging that DWF Labs had manipulated the prices of several tokens through $300 million worth of wash trades in 2023. However, Binance determined that there was insufficient evidence of market abuse, the WSJ report states.

A specific token linked to Web3 gaming, YGG, was named alongside six other tokens. YGG is a token launched by Yield Guild Games, a Web3 firm which has key leadership from the Philippines, where Binance is currently banned.

A recent statement from Binance further said that it was “unaware” of the documents, arguing that these allegations were “very concerning” if proven to be true. The exchange’s founder, Changpeng Zhao, has been sentenced to four months in prison after the exchange was embroiled in a series of legal battles.

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