Binance Bans Market Maker Over GPS and SHELL Misconduct, Seizes Funds for User Compensation

• Binance permanently banned a market maker after unethical trading involving GPS and SHELL tokens, confiscating illicit profits and compensating affected users.
• The exchange tightened market regulations, warning market makers against manipulation while introducing community oversight in token listings.

Crypto exchange Binance quickly acted against a market maker involved in suspicious trading linked to GoPlus Security (GPS) and MyShell (SHELL). Investigations confirmed unethical practices, leading to a permanent ban. Binance also took away the profits gained through that misconduct and said that the affected users of those tokens would get compensation.

Binance announced that after investigating the misconduct of the market maker for GoPlus Security (GPS), it discovered that the same market maker was also responsible for the market making of the MyShell (SHELL) project. To protect users, Binance has delisted this market maker…

— Wu Blockchain (@WuBlockchain) March 9, 2025

Market makers ensure liquidity and stabilize prices in crypto trading. However, manipulating order books for an unfair advantage creates financial risks for traders. Binance reinforced its strict policy against violations, demonstrating a firm stance on maintaining integrity within its trading ecosystem.

A Binance spokesperson highlighted the company’s focus on fair trading, saying user protection and fairness are top priorities. He said:

Protecting our users and maintaining a fair trading environment remain our top priorities. This incident underscores our proactive approach to identifying and addressing misconduct, and we will continue to enhance our monitoring systems to prevent future breaches.

Binance Cracks Down on Violator After 70M GPS Sell-Off

Trouble began when Binance noticed something odd with the GPS right after listing. Within days, the token received a Monitoring tag due to erratic price swings, raising concerns about market manipulation. The exchange later identified a single market maker as the source of a rapid sell-off involving 70 million GPS tokens. That action drained approximately $5 million in liquidity and inflicted heavy losses on early traders.

Further investigation exposed the same market maker’s involvement in SHELL token transactions, violating Binance’s market participation policies. The exchange swiftly removed the entity and imposed a permanent ban on future engagement. To mitigate damage, Binance confiscated illicit profits and allocated funds to affected GPS and SHELL token holders.

Despite taking decisive action, Binance has yet to reveal the exact compensation plan for impacted users. However, the company assured traders that details on eligibility, distribution mechanisms, and payout timelines would be disclosed in the coming days.

Stronger Regulations and Listing Overhaul

In response to growing concerns over market integrity, Binance announced an overhaul of its token listing and delisting process. Under updated guidelines, users with over 0.01 BNB can vote on whether tokens remain on the exchange. Final decisions rest with Binance, but the change introduces community oversight.

A crackdown on a rogue market maker underscored the strict enforcement of trading policies. Binance warned all market makers to comply with regulations, maintain fair bid-ask spreads, and avoid disruptions caused by excessive order placement and cancellations.

As regulatory challenges shape the crypto landscape, Binance founder Changpeng Zhao addressed industry ethics. On March 10, he stated that excessive capital flows into short-term gains rather than supporting ethical teams focused on sustainable growth. He emphasized patience and strategic investments as key to long-term success.

Unpopular opinion:

In crypto, too much money is spent chasing small, quick gains. Focus on ethical teams that build for the long term. Big money is built slowly with stamina.

— CZ BNB (@cz_binance) March 9, 2025