Binance finally responded to allegations from online traders who accused the exchange of manipulating the market by 'dumping' millions of SOL and ETH tokens through Wintermute.
In a recent post shared by Binance's customer support account, Binance responded to a trader's inquiry about on-chain data, which showed that Binance's hot wallet 'sent' millions of Solana (SOL) and Ethereum (ETH) tokens from its held assets on February 24. The trader accused the exchange of 'dumping' tokens on everyone through sell-offs.
In response to the comment, Binance denied the allegations regarding its 'dumping' or 'selling' of millions of tokens. It claimed that many traders simply 'misunderstood' the on-chain transactions related to Wintermute.
In a recent article, Binance explained: 'As an exchange, we are simply helping users match trades, and we are unable to understand users' decisions, including those made by market makers who might transfer assets based on their strategies.'
Market makers are companies or entities that specialize in providing liquidity to the cryptocurrency market by placing buy and sell orders, thereby narrowing the bid-ask spread and making trading activities smoother. Market makers play a crucial role in the cryptocurrency market by absorbing large orders, reducing price drops, and helping to stabilize the market.
Exchanges like Binance typically collaborate with market makers by providing them with tokens as rewards or incentives to encourage market makers to continuously increase their inventory. By doing so, market makers like Wintermute can enhance the liquidity of the platform.
An analyst from X explained that Binance did not sell tokens to Wintermute, but rather Wintermute withdrew tokens from Binance's holdings to maintain market liquidity.