Binance tightens rules for token issuers and market makers

Investing.com -- Binance announced Wednesday that it is implementing stricter regulations for token issuers and liquidity providers on its platform, following criticism of digital-asset market practices during October's market meltdown.

The world's largest crypto exchange said in a blog post that crypto projects are now prohibited from having revenue-sharing models with market makers. Market makers are also banned from engaging with projects to manipulate prices or distort token liquidity. Binance said it will take "swift, decisive action against any misconduct," including blacklisting market makers.

"We're committed to ensuring transparency and integrity across the crypto industry," Binance said in the post. "Protecting our users and maintaining a fair, trustworthy trading environment comes first."

Crypto exchanges have faced increased scrutiny since the Oct. 10 crash, which eliminated $19 billion in leveraged bets. The broader digital-asset market has not yet recovered from the crash.

Under the new rules, crypto projects must report to Binance about the details, legal entity and contract terms of the market makers they work with.

Binance outlined six red flags that indicate manipulative market-making behaviors. These include "a pattern of persistent sell-side orders" without similar buy-side activity and "coordinated" token deposits and selling activity across different crypto exchanges.

In January, Changpeng "CZ" Zhao, the co-founder and former chief executive officer of Binance, said accusations that the platform bears responsibility for the crypto market crash last October are "far-fetched."

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