Market Makers Manipulation: A Curse for Cryptocurrencies?
Market makers play a vital role in the crypto ecosystem by ensuring liquidity, transaction efficiency, and preventing excessive price volatility. Platforms like Binance even incentivize them through dedicated programs to maintain tight bid-ask spreads and robust order books, benefiting traders and projects.
However, recent controversies surrounding market makers raise concerns about their true role. Are they acting as stabilizing forces or exploiting their position to make massive profits at the expense of retail investors?
The Web3port Scandal : A Toxic Maneuver
Recent investigations have uncovered a shocking case involving the market maker Web3port. Associated with multiple projects on Binance like GoPlus Security (GPS), Myshell (SHELL), and Movement (MOVE), Web3port allegedly raked in $38 million in profits on a single project, while retail investors suffered heavy losses.
According to crypto analyst Jason Chen, this level of profitability is too high, with the entire crypto sector seemingly working for market makers. The controversy escalated when Binance took action against Web3port’s market-making activities.
The exchange revealed that a market maker for the Movement (MOVE) project engaged in suspicious activities, dumping 66 million MOVE tokens the day after launch while placing minimal buy orders. This led to a sharp price drop, hurting retail investors. Binance then froze the market maker’s profits and delisted them from the platform, also demanding compensation from the affected MOVE project users.
Binance Accused of Complicity
Despite Binance’s recent crackdown on dishonest market makers, questions linger about why the exchange took four months to address these issues. As blockchain journalist Colin Wu pointed out, tens of millions of dollars in tokens were liquidated in December 2024, but Binance only publicly addressed this misconduct in March 2025.
Some speculate that Binance may have benefited from increased trading activity generated by these market makers. Greater volatility results in higher transaction volumes, thereby generating more commissions for exchanges.
Moreover, Binance has a history of controversies related to market-making, including a $4.3 billion fine in 2023 for facilitating wash trading through market maker Sigma Chain.
Hence, Binance’s recent actions against Web3port and others could be an effort to clean up its operations and avoid further legal troubles amid increased regulatory scrutiny.
A Common Manipulation in Crypto ?
While market makers are essential for liquidity, their ability to manipulate prices and accumulate massive profits raises serious ethical concerns. Are they true market stabilizers or hidden manipulators extracting profits from inexperienced traders?
The Web3port scandal adds to the allegations faced by one of the biggest industry market makers: Wintermute. They had been under scrutiny as the memecoins under their management started plummeting for weeks.
Furthermore, Binance’s delayed actions illustrate the ethical dilemmas surrounding the role of market makers in the crypto ecosystem. As the industry evolves, it becomes crucial to regulate their activities better and ensure greater transparency to protect retail investors.
