With Binance founder and former CEO Changpeng “CZ” Zhao recently sentenced to four months imprisonment, a WSJ report is alleging that the crypto exchange giant fired one of its investigators who exposed market manipulation by one of the companys clients, DWF Labs.

Binance, however, denied the report, stating that the cryptocurrency exchange maintains a strict market surveillance program that does not tolerate market abuse.

DWF Supposedly Involved in Wash Trading Worth $300 Million

According to a report by the Wall Street Journal, Binance hired a team of investigators following allegations of enabling market malpractice by financial regulators as a way to clean up the company.

The investigative team in one of its investigations, found out that Binances VIP clients, made up of top traders who accounted for two-thirds of the companys total trading volume in 2023, were engaged in wash trading and pump and dump schemes.

One of such VIP clients allegedly involved in market manipulation was the market maker DWF Labs, which was previously accused of the same crime in 2023.

DWF Labs made a minimum of $4 billion in trades per month. According to the WSJ article, which cited current and former Binance employees as its sources, as well as reviewed emails and key documents, DWF Labs proposed to its clients that it could “drive up” token prices and create “artificial volumes” on the exchange and other platforms, in a way that would attract traders.

The Binance investigators found out that DWF Labs helped manipulate the price of the Yield Guild Game (YGG) token and six others, processing $300 million in wash trades in 2023.

However, when the surveillance team submitted reports of DWFs activities to Binance, the crypto exchange fired the head of the project one week after submission. Speaking to WSJ, a Binance executive said the investigator was fired after an internal inquiry revealed that the allegations against DWF Labs were not “fully substantiated.”

Binance and DWF Refute WSJ Report

A Binance spokesperson in the article stated that the crypto exchange did not permit market manipulation on its platform, further stating:

“We have a robust surveillance framework that identifies and takes action against market abuse. We do not favor any individual user, no matter how big, over the safety of the platform.”

The spokesperson went on to say that the company off-boarded close to 355,000 users in the past three years and found guilty of violating Binances terms of use, with a transaction volume of $2.5 trillion.

In an X post, the crypto exchange stressed that the firm was intolerant to market abuse, adding that:

“Market maker competition is fierce and our investigation team’s job is to be neutral and look at the evidence without any bias, including bias that might come from market-making firms’ claims against their competitors. We aim to ensure healthy competition in the industry and always fight to protect our users from market manipulation.”

DWF Labs also refuted the claims made in the WSJ article, stating that the allegations were “unfounded” and “distort the facts.”

“DWF Labs operates with the highest standards of integrity, transparency, and ethics, and we remain committed to supporting you and our over 700 partners across the crypto ecosystem.”