Binance chief Changpeng Zhao cracked down on laundry trading taking place on the crypto exchange following the company’s decision to remove fees to Bitcoin spot dealer.
Laundry is when when traders sell and buy assets from themselves or otherwise make fictitious trades. For example, NFT marketplace Looks Rare sees plenty of laundry trade due to the LOOKS token, which is earned by using the site.
A social worker at the Mandala Exchange notice Friday that a large volume of Bitcoin had suddenly been traded in a short time, but the price of Bitcoin had hardly changed. This indicated that a large number of traders bought and sell, keep the price more or less stable.
“I think this is due to zero fees and people trying to get VIP levels,” Zhao explained, adding that Binance would “exclude BTC trading from VIP calculations” and “remove all incentives to wash trade”On the stock exchange.
Binance currently has nine different VIP levels, each of which offers lower user fees for all currencies listed on the stock exchange. The more funds a user has spot traded within 30 days, the higher your VIP level will be.
A level system that rewards high trading volumes, offers trading benefits and charges low to no fees, can be vulnerable to tampering and laundering.
Within hours, Binance issued one announcement excludes the 13 different Bitcoin spot pairs (ie BTC / BUSD) from VIP benefits and its spot liquidity provider program. The changes were made to “ensure a fair trading environment for all users,” the company said.
The exchange made the decision to remove Bitcoin spot trading fees on the fifth anniversary. Compared to other weary crypto companies like BlockFi and Celsius or exchange as Coin base and The twinswhich is laying off employees, it seems that Binance is staying strong through the bear market.
Last month, it announced it would sponsor musicians The weekendhis upcoming world tour, and a few weeks later unveiled a significant social media and NFT partnership with Cristiano Ronaldofootball star and the most popular person on Instagram.
But Zhao also has some thoughts on FTX’s strategies – especially when it comes to FTX borrow funds to sick businesses and possibly acquire said companies at a later date.
“I would never make that kind of deal,” Zhao said Decrypt.
Do you want to become a crypto expert? Get the best from Decrypt right to your inbox.
Get the biggest crypto news + weekly summaries and more!
