Binance on March 25, 2026 released mandatory market maker disclosure rules requiring all listed token projects to identify their liquidity providers, reveal contract terms, and prohibit profit-sharing arrangements. The policy follows 18 months of enforcement actions — including the FBI's Operatio...
"I call it information arbitrage, where the market maker very clearly understands the pros and cons of the deals but is able to put it such that it's a benefit." — Jelle Buth, Co-founder, Enflux
Binance on March 25, 2026 released mandatory market maker disclosure rules requiring all listed token projects to identify their liquidity providers, reveal contract terms, and prohibit profit-sharing arrangements. The policy follows 18 months of enforcement actions — including the FBI's Operation Token Mirrors, which led to guilty pleas from three market-making firms and $25 million in asset seizures — and a string of on-platform scandals in which market makers netted tens of millions of dollars by dumping borrowed tokens within days of listing.
The rules arrive as the broader regulatory apparatus tightens. South Korea's Financial Supervisory Service (FSS) deployed AI-powered surveillance tools in early 2026 to flag abnormal price movements within minutes. The U.S. SEC's October 2024 crackdown on ZM Quant, Gotbit, and CLS Global produced the first criminal convictions of crypto market makers for wash trading. Binance's self-regulation push, while voluntary, marks the first time a major exchange has codified market maker conduct standards — a move that exposes how little transparency existed before.
Binance's March 25 policy update imposes six requirements on token issuers listing or maintaining listings on the platform:
The rules also ban profit-sharing and guaranteed-return arrangements between projects and market makers, targeting the financial structures that incentivize dumping.
A Binance spokesperson told CoinDesk the rules are "intended to help projects conduct stronger due diligence on their market-maker partners and remind users to be mindful of market conditions."
Separately, Binance published six red flags that traders should monitor: premature token sales breaking unlock schedules, persistent one-sided sell orders, coordinated cross-exchange selling, high volume with no price movement (indicative of wash trading), thin liquidity relative to reported volume, and repeated sell-side pressure without corresponding buy activity.
Three on-platform incidents catalyzed Binance's policy shift.
Movement (MOVE): On December 10, 2024, one day after the MOVE token launched on Binance, a market maker sold approximately 66 million MOVE tokens with minimal corresponding buy orders, according to Binance's internal review. The market maker netted an estimated $38 million in profit. Binance offboarded the firm — identified in reporting as Web3port — on March 18, 2025, froze the profits, and returned funds to affected users.
GoPlus Security (GPS): Web3port was also linked to the GPS token, where similar one-sided selling patterns appeared after listing. The same firm was connected to the Myshell (SHELL) token.
SIREN: Market manipulation was detected on Binance's own listed futures contracts, extending the misconduct pattern beyond spot markets.
Arthur Cheong, founder of DeFiance Capital, summarized the market reaction: "Confidence in the altcoin market is eroding. Absolutely bizarre that CEXs are turning an absolute blind eye to this."
Binance's response — codifying conduct standards rather than simply offboarding individual bad actors — represents a structural shift.
The dominant compensation structure in crypto market-making is the "loan + call option" model. A project lends a block of tokens to a market maker, who uses them as trading inventory to provide liquidity. In exchange, the market maker receives call options at a pre-set strike price — often five to ten times above the current market price, according to analysis by Flowdesk.
The economics create a structural incentive to depress prices. A market maker holding borrowed tokens profits by:
Ariel Givner, founder of Givner Law, told Cointelegraph: "I haven't seen any token really benefit from these market makers. I'm sure there are ethical ones, but the bigger ones I've seen just destroy charts."
Kristiyan Slavev, co-founder of Web3 accelerator Delta3, described the pattern as uniform: "It's exactly the same pattern. They give tokens, then they're dumped. That's pretty much what happens."
The alternative — a retainer model, where market makers are paid a fixed monthly fee — aligns incentives but requires deep treasury reserves that most early-stage projects lack.
Andrei Grachev, managing partner of DWF Labs, one of the larger crypto market-making firms, stated that "selling loaned tokens upfront can damage a project's liquidity — especially for small- to mid-cap tokens."
The most significant enforcement action against crypto market manipulation to date was the FBI's Operation Token Mirrors, announced in October 2024.
Federal agents created a decoy token — NexFundAI — and approached known market-making firms offering wash trading contracts. Three firms took the bait:
In total, 18 individuals and entities were charged. Over $25 million in crypto assets were seized. Four defendants pleaded guilty.
The operation revealed the scale of wash trading infrastructure: according to SEC filings, the charged market makers used algorithms generating artificial trading volume worth billions of dollars across multiple exchanges.
According to Chainalysis data from its 2025 market manipulation report, approximately 67% of the roughly 30,000 DEX liquidity pools analyzed showed evidence of wash trading behavior. On centralized exchanges, the combined suspected wash trading volume on Ethereum, BNB Smart Chain, and Base reached approximately $704 million in 2024.
South Korea's Financial Supervisory Service (FSS) in February 2026 announced a dedicated crypto market manipulation detection program powered by artificial intelligence.
FSS Governor Lee Chang-jin stated that the agency "will target high-risk trading practices that undermine market order, including coordinated manipulation and schemes exploiting disruptions in exchange infrastructure," according to Yonhap News Agency.
The system targets five manipulation typologies:
The FSS secured a 170 million won ($116,000) budget for 2026 to upgrade AI surveillance capabilities. The system is designed to flag abnormal price movements within minutes and identify clusters of linked wallets acting in coordination.
South Korea's approach is significant because the country accounts for a disproportionate share of global crypto trading volume. Its Virtual Asset User Protection Act, enacted in 2024, provides the legal framework for enforcement.
The foundational economics of market-making in crypto reveal a structural value extraction layer that operates largely outside transparent fee mechanisms.
When a project lends 5% of its token supply to a market maker under a loan option agreement, and that market maker dumps the tokens within days of listing, the economic effect is equivalent to a hidden dilution event. Retail buyers absorb the selling pressure. The market maker captures the spread. The project's market cap contracts. No disclosure was required until Binance's March 2026 policy.
This mechanism explains a pattern visible across the altcoin market: tokens that launch with strong initial demand but experience rapid, sustained price declines within the first weeks of trading. The selling is not organic — it is structural, driven by the incentive architecture of the loan option model.
The total economic extraction by market makers across the crypto ecosystem is difficult to quantify precisely, given the opacity of arrangements. However, the $38 million profit from a single MOVE token operation, the $23 million forfeiture in the Gotbit case, and the CLS Global penalties point to an industry where individual market-making engagements routinely generate eight-figure profits at project and retail expense.
Crypto exchange listing fees compound the problem. While Binance has maintained since 2018 that listing fees are donated to charity, reporting from multiple sources has documented listing terms that include 1% day-one airdrops, 3% follow-up airdrops, $250,000 security deposits, and $2 million BNB deposits for spot listings. These costs, combined with market maker loan agreements, mean projects can lose 5-10% of their token supply to intermediaries before a single retail trade occurs.
Binance's move is not occurring in isolation, though other exchanges lag in formalizing market maker conduct rules.
OKX has adopted a "zero-tolerance" enforcement posture toward illicit activity and publishes monthly zk-STARK-based proof-of-reserves. However, the exchange has not published comparable market maker disclosure requirements.
Kraken operates with jurisdiction-specific compliance disclosures and emphasizes security transparency, but has not released formal market maker conduct guidelines.
Bybit publishes daily insurance fund balances and stores the majority of user funds in cold storage, but similarly lacks public market maker transparency policies.
The gap is notable. Binance's policy creates an asymmetry: projects listing on Binance must disclose their market makers, but the same firms operate undisclosed on competing platforms. Whether this drives industry-wide adoption of similar standards or simply pushes manipulative activity to less regulated venues remains an open question.
The SEC's enforcement actions apply regardless of exchange, but only cover U.S. jurisdictions. Many crypto market makers operate from jurisdictions with minimal oversight — CLS Global, for example, was based in the UAE free zone.
Binance's market maker disclosure rules represent the first attempt by a major exchange to address a structural value extraction problem that has operated in the open — but undisclosed — for years. The loan option model, the dominant market-making arrangement in crypto, creates incentives for market makers to dump borrowed tokens after listing, extracting value from retail buyers and projects alike.
The enforcement trajectory is clear: FBI sting operations, SEC civil penalties, criminal convictions, and now exchange-level self-regulation. Each layer adds friction to manipulative market-making. Whether it is sufficient friction depends on adoption by competing exchanges.
The economic reality remains stark. Crypto market-making arrangements operate as a hidden cost layer that is ultimately borne by retail participants — the same dynamic identified in broader blockchain economic analysis, where 85-90% of ecosystem value flows remain subsidy-driven rather than fee-sustained. Market maker extraction adds another opaque cost to that stack.
The question is whether Binance's rules mark the beginning of industry-wide transparency standards or a competitive disadvantage that drives activity to less regulated venues. The answer will determine whether the next MOVE-scale scandal occurs on Binance — or somewhere else.