Binance Cracks Down on Active Market Makers: A Long-Overdue Trial
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Binance Cracks Down on Active Market Makers: A Long-Overdue Trial
Real accountability requires regulatory intervention and law enforcement agencies—not just exchanges acting as judges.
Navigating Web3 tides with focused insightsAuthor: TechFlow
On March 25, Binance published a blog post with the deliberately understated title “Red Flag Guide for Crypto Market Makers.”
Yet industry insiders know the post’s true meaning boils down to one sentence: “I know exactly what you’re doing—and I reserve the right to act against you at any time.”
After successive scandals involving market makers GPS, SHELL, and MOVE, Binance has decided—publicly and for the first time—to codify into formal rules the enforcement authority it had long exercised quietly.
A New Species in Bear Markets
To understand this announcement, we must first clarify what “active market making” actually means.
In bull markets, every project finds buyers. Market makers’ work is simple: place orders, provide two-sided liquidity, collect fee rebates—and thrive comfortably and respectably. They are genuine “liquidity providers”: the market needs them, but does not rely on them entirely.
The bear market shattered all that.
Buy-side demand dried up; no new capital entered on-chain; trading volumes for most altcoins were halved—and then halved again—in 2026. When a mid-sized new project launched on Binance, organic user activity alone could barely sustain daily trading volume—and its price would rapidly collapse. For the project team, this amounted to slow death.
At that moment, a group of actors appeared—armed with a polished sales pitch:
“We’ll support your token’s price. Liquidity is our responsibility. We’ll stabilize the price. All guaranteed in black-and-white contract terms.”
This is the “active market maker”—a hot new species bred by the bear market.
Their business model differs fundamentally from traditional market makers: they do not profit from bid-ask spreads, but instead directly participate in the project’s token allocation—receiving zero-cost tokens—and then offload those tokens under the legal guise of “market making.”
How exactly do they operate? The playbook has been thoroughly dissected within the industry:
The project team’s tokens cost nothing; the market maker’s real cost is leveraged capital—USDT deployed as margin for two-sided liquidity. Yet the sophistication of active market makers lies in their provision of one-sided liquidity: they place only sell-side orders—not buy-side ones. Buy-side liquidity appears healthy on the order book—but when retail users begin large-scale selling, there is simply no counterparty to absorb it. The price collapses.
Web3Port—the market maker behind GPS—has already become a textbook case: Within 21 hours of listing, it sold only, dumping 70 million tokens and pocketing ~$5 million in profit. GPS plummeted from $0.14 to $0.04—a 60% drop—with buy-side liquidity nearly vanishing. Its sister token SHELL, also operated by the same team, slid steadily from $2.30 to $0.30—the two crash curves nearly identical.
The irony runs deeper: Web3Port is not merely a market maker—it is an integrated industrial chain: its incubator acquires 1–3% of early-stage projects’ tokens for free; its subsidiary market-making arm Whisper executes the dump; projects accept harsh listing conditions just to get listed; and retail investors become the sole exit point—the only ones left holding the bag. From initial token acquisition to final cash-out, the entire chain operates flawlessly.
Victor Ji, co-founder of Manta, captured the industry’s reality most honestly in a post on X: “We receive invitations almost daily from so-called active market makers and OTC desks—and none of them care about the project’s fundamentals at all.” He added that during Polkadot’s era, Manta was subjected to market making by Three Arrows Capital, which demanded over 3% of the token supply—and promptly dumped it, despite solemnly pledging not to sell.
Three Blow-Ups—and One Public Humiliation
Some analysts have debated the timing of Binance’s announcement, suggesting it responds to pressure from last October’s major market crash. That view isn’t wrong—but misses the core issue.
October’s crash delivered a loud slap to Binance—but what truly rattled Binance was the string of successful manipulations by active market makers on its own platform since early 2025: once, twice, three times—each generating massive headlines, impossible to suppress.
After the GPS incident broke, KOLs began deep-diving into Web3Port’s market-making portfolio—and discovered it served far more than just GPS and SHELL: Aethir, dappOS, Movement, Puffer… a long list emerged, sending shockwaves across the market.
MOVE became the final straw: The market maker dumped 66 million tokens, illegally profiting $38 million in USDT—a figure impossible to dismiss as “normal market volatility.” It ignited immediate community-wide doubts about Binance’s regulatory competence.
Then came SIREN—just 48 hours before Binance’s announcement.
SIREN, originally launched on BNB Chain as an “AI agent analyst” token, was nearly forgotten after its early-2025 listing. But starting in February 2026, a mysterious wallet cluster began accumulating aggressively. By March 22, SIREN surged from ~$0.08 to an all-time high of $3.61—an over 45x gain—briefly pushing its market cap above $2.2 billion, landing it temporarily among the top 30 global crypto assets by market cap—outranking OKB and UNI.
On-chain investigators moved swiftly.
Bubblemaps issued a warning on March 22: A cluster of over 200 wallets held roughly 50% of SIREN’s circulating supply—worth ~$1.5 billion at the time—and wrote: “There is only one possible ending.” Hours later, the crash began.
On-chain analyst EmbersCN dug deeper—and found actual control far exceeded expectations: Of the top 54 largest circulating SIREN holders, 52 belonged to the same entity, collectively holding 644 million SIREN tokens—88.5% of the total circulating supply—valued at ~$1.44 billion at peak price. The entire market was essentially a solo performance—retail buyers merely betting against a single actor.
ZachXBT then linked this wallet cluster to DWF Labs, noting on-chain connections between these addresses and several previously manipulated low-cap tokens (LADYS, RACA, TOMO) previously handled by DWF. Zac, co-founder of DWF Labs, denied involvement—but on-chain evidence quickly went viral.
The manipulation tactics were even more sophisticated than those used in GPS or MOVE. The market maker first pumped the price to lure short sellers—then reversed course and triggered massive short liquidations, causing $2.4 million and $4.7 million in forced short closures on Binance and Bybit respectively. Funding rate data showed SIREN maintained persistently high negative funding rates starting March 14—meaning short-sellers paid hourly fees to long-holders, effectively subsidizing the pump. On March 23, Gate’s spot market saw a 78% surge in 10 minutes—on just ~$450,000 in volume—yet leveraged liquidations flooded in.
On March 24, the crash began. Within 72 hours, SIREN shed 71% from its peak—its market cap collapsing from $2.2 billion to $740 million. Someone on X dubbed it “the biggest scam of 2026.”
This episode contained a critical detail absent from GPS: Binance adjusted the exchange-weighting methodology in SIREN’s futures price index—twice—to reduce the impact of manipulation on any single exchange. This signals Binance itself knew something was deeply wrong with the price action.
GPS was the beginning. MOVE was escalation. SIREN was outright public humiliation—and occurred on Binance’s own listed futures contracts.
Binance’s historical response has been reactive enforcement: freezing accounts, confiscating illicit profits, delisting market makers. That approach may calm public outrage after a single incident—but after three blow-ups plus SIREN, the question changed. The market began asking: “Did you not know—or did you choose not to know?”
That is the real problem Binance’s March 25 announcement seeks to solve—not cracking down on market makers, but rebuilding its own credibility.
The Power Hidden in the Rules
Reading the announcement closely, Binance’s six listed “red flag behaviors” comprehensively describe the full playbook of active market makers: aggressive dumping conflicting with token release schedules; placing one-sided sell orders; cross-platform coordinated dumping; abnormally high trading volume inconsistent with price trends; and abnormal price volatility caused by insufficient liquidity.
Each item precisely maps onto the GPS, SHELL, and MOVE cases.
But the more crucial line lies buried beneath: “Binance will take swift and decisive action against any misconduct—including blacklisting market makers.”
What does “blacklist” mean on Binance? Web3Port has already demonstrated it: account freezes, full confiscation of illicit gains, and permanent bans on all future market-making activities on Binance. For a market maker whose survival depends on Binance’s platform, this amounts to industry death.
This is the announcement’s core message—and the least-discussed part: Binance is formally institutionalizing, via written rules, the discretionary enforcement power it previously wielded silently.
Before, Binance acted reactively—“investigating and responding after problems surfaced.” Now, Binance acts proactively—“enforcing clearly stated rules.” The nature is entirely different: the former is firefighting; the latter is deterrence.
And the target of this deterrence extends beyond market makers.
The new rules require token projects to disclose their market makers’ identities, legal entities, and contractual terms to Binance—and ban profit-sharing agreements and guaranteed return clauses. This means every project seeking listing on Binance must now expose its financial arrangements with market makers to Binance’s scrutiny.
Who is your market maker? What does your contract say? Is there profit sharing? Any guarantees?
Your answers determine whether you get listed—and whether you stay listed.
What the Rules Can—and Cannot—Solve
Returning to reality: Can these new rules eradicate the active market maker problem?
An honest answer is: Almost certainly not.
What Binance can regulate is behavior occurring solely on its platform. Yet active market makers typically coordinate across exchanges—pumping on Exchange A, dumping on Exchange B—while routing funds through multiple pseudonymous on-chain addresses. Single-exchange surveillance cannot achieve holistic oversight.
The deeper issue lies in the token distribution mechanism itself—which remains unchanged. As long as projects continue to “pay” market makers with free tokens—and as long as market makers retain zero-cost tokens as ammunition for dumping—the incentive for active market makers to extract value will persist. Rename the scheme, rebrand the shell, switch platforms—the game continues.
The new rules contain one genuine structural flaw: Is the blacklist public? A non-public blacklist is a sword hanging over market makers’ heads—but only Binance knows where it will fall.
@cryptobraveHQ commented after Binance’s announcement: “This move resembles little more than a platform disclaimer—since the platform has always known, and continues to know, about such incidents. Active market making is illegal in virtually every jurisdiction. Evidence should be shared with relevant regulators and law enforcement—not confined to internal review.”
This cuts to the heart of the matter.
Binance’s internal blacklist carries minimal legal weight. Real accountability requires regulatory intervention and law enforcement—not self-appointed judges at exchanges.
The active market maker industrial chain will keep operating through the bear market—only now at higher cost, greater risk of detection, and heavier reputational pressure from public naming. That is already the most the industry can realistically hope for today.
Retail investors need to understand: Recognizing how market makers operate doesn’t mean you can win this asymmetrical information war. But at least now you know—who is the referee, who are the players, and who is the chip on the table.
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