Binance Blocks Market Maker Over GPS and SHELL Token Manipulation

Exchange Takes Action Against Suspicious Trading Activity

Binance has taken decisive action against a market maker involved in the trading of GoPlus Security (GPS) and MyShell (SHELL) tokens, blocking the entity on March 9 after detecting irregular trading behavior. The exchange cited manipulation of orders and liquidity as the primary reasons behind the ban, stating that the move was necessary to protect users. 

As part of the enforcement, Binance confiscated the market maker’s funds, which will be allocated to compensate affected GPS and SHELL traders. Project representatives are expected to provide further details on the compensation process in due course.

Although Binance did not explicitly name the entity, evidence suggests that the blocked market maker is Whisper, a Chinese firm allegedly linked to a broader scheme involving Spark Digital Capital. Former Binance CEO Changpeng Zhao amplified a post by crypto analyst Quai Dong, highlighting Whisper’s suspected role in the manipulation. 

According to the findings, Spark Digital Capital originally supported blockchain projects through financial backing and market-making services, receiving free tokens in exchange. However, as competition within the sector intensified between 2021 and 2022, this approach lost its effectiveness, prompting Spark to pivot towards a new business model.

In response to changing market conditions, Spark Digital Capital launched Web3Port, a service aimed at facilitating investment deals and attracting venture capital firms in exchange for 1-3% of a project’s free tokens. The shift, however, failed to yield the desired profits, leading to the creation of Whisper, a structure that allegedly posed as a legitimate liquidity provider while offloading tokens retained by project teams. 

Retail investors on Binance ultimately became the end buyers of these assets, according to Dong’s analysis. Binance’s crackdown on Whisper signals a firm stance against manipulative market practices, reinforcing its commitment to fair and transparent trading.

This article has been refined and enhanced by ChatGPT.