Author: TechFlow

On March 25, Binance published a blog post with a very restrained title - "Red Flag Guide for Crypto Market Makers".

But those in the industry know that the true message of this blog can be summed up in one sentence: I know what you are doing, and I reserve the right to deal with you at any time.

After experiencing scandals involving market makers like GPS, SHELL, and MOVE, Binance decided to clearly codify the powers they had quietly exercised into rules for the first time.

New Species in a Bear Market

To understand this announcement, one must first clarify what the term "active market maker" means.

In a bull market, every project has buyers, making the job of market makers simple: placing orders, providing bilateral liquidity, and earning fee rebates, living comfortably and with dignity. They are the true "liquidity providers", the market needs them, but does not entirely depend on them.

The bear market shattered all of this.

Buying pressure dwindled, no new money came into the chain, and the trading volume of most altcoins halved and halved again in 2026. A medium-sized new project listed on Binance may not be able to sustain daily trading volume from real users at all, and the price would quickly drop. For the project team, this is a slow death.

At this moment, a group of people appeared, armed with a complete set of pitches:

"I will support your token, liquidity is on me, I will help you stabilize the price, in black and white in the contract."

This is the active market maker, a popular species birthed by the bear market.

Their business model is fundamentally different from traditional market makers: they do not make money from the bid-ask spread but directly participate in the project's token distribution, acquiring a batch of zero-cost chips, and then disposing of these chips through the legal guise of "market making".

How exactly does this work? The tricks have been clearly dissected by insiders:

For the project, the cost of tokens is zero, and the market maker's true cost is leverage — leveraging USDT, as collateral for bilateral liquidity. But the clever aspect of active market makers is that they often provide unilateral liquidity: they release tokens but not USDT. The buy-side liquidity seems healthy, but once retail investors start selling in large amounts, the opposition cannot handle it at all. This is how the price collapses.

The trading strategies of the GPS market maker Web3Port have become textbook examples: within 21 hours of launching, they sold 70 million tokens, making approximately 5 million USD in profit while buying nothing. GPS plummeted from 0.14 USD to 0.04 USD, a drop of 60%, during which buying pressure nearly dried up. SHELL, from the same team, fell from 2.3 USD to 0.3 USD, with both crashing curves nearly replicating each other.

Ironically, Web3Port is not just a market maker; it represents a complete industrial chain: the incubator is responsible for exchanging 1% to 3% of free tokens from early project teams, while the affiliated market maker Whisper is tasked with monetizing them, and project teams accept harsh conditions to get listed, where retail investors are the only buyers at the end of the chain. The entire chain, from token acquisition to cashing out, is leak-proof.

Victorji, co-founder of Manta, stated on X that his words might be the most honest expression of the industry: “We basically receive invitations from so-called active market makers and OTCs every day, and they never consider the fundamentals of the projects at all.” He also mentioned that Manta was market-made by Three Arrows during the Polkadot era, where the other party took over more than 3% of the tokens, flipped, and then sold them while claiming they wouldn't sell.

Three Crashes and One Public Humiliation

When Binance released this announcement, some discussed the timing, suggesting it was a response to the pressures following the major crash in October last year. This claim isn't wrong, but it misses the point.

The October crash gave Binance a loud slap in the face, but what really made Binance restless was from the beginning of 2025 until now, active market makers continuously succeeded on their platform, once, twice, three times, and each time made a big noise that couldn't be suppressed.

After the GPS incident, KOLs in the circle began deep-diving into Web3Port's market-making landscape, discovering that it served not only GPS and SHELL but also Aethir, dappOS, Movement, Puffer... a long list of names began to surface, and the market started to panic.

The MOVE incident was the last straw: the market maker dumped 66 million tokens, illegally profiting 38 million USD, a figure that could no longer be explained by "normal market fluctuations," directly igniting community doubts about Binance's regulatory capabilities.

Then there was SIREN, which was publicized just 48 hours after the announcement.

SIREN is a token originally launched on the BNB Chain under the name "AI Agent Analyst," and was nearly forgotten by the market after its launch in early 2025. However, starting February 2026, a mysterious cluster of wallets began to accumulate large amounts. By March 22, SIREN skyrocketed from around 0.08 USD to a historical high of 3.61 USD, with an increase of over 45 times and a market cap that momentarily exceeded 2.2 billion USD, briefly hitting the top 30 in global crypto market cap, surpassing OKB and UNI.

On-chain detectives quickly took action.

Bubblemaps issued a warning on March 22: an address cluster composed of over 200 wallets held about 50% of the circulating supply of SIREN, valued at around 1.5 billion USD at the time, stating, "This can only have one ending." Hours later, the crash began.

On-chain analyst EmberCN further dug deeper and found that the actual controlling extent exceeded expectations: out of the top 54 holding addresses, 52 belonged to the same entity, collectively controlling 644 million SIREN, accounting for 88.5% of the circulating supply, equivalent to about 1.44 billion USD at peak prices. In the entire market, retail buy orders were simply betting against a one-man show.

ZachXBT later associated this batch of wallets with DWF Labs, pointing out on-chain connections with several obscure tokens (LADYS, RACA, TOMO) previously operated by DWF. DWF Labs co-founder Zac promptly denied involvement, but on-chain evidence was already rampant.

The trading strategies were more sophisticated than those of GPS and MOVE. The market maker initiated price increases to lure shorts into the market, then flipped and burst the short positions, triggering liquidations of 2.4 million USD and 4.7 million USD respectively on Binance and Bybit. Funding rate data showed that starting March 14, SIREN continued to experience high negative funding rates, causing shorts to pay fees to longs every hour, essentially covering the costs of the market manipulators. On the early morning of March 23, the Gate spot market experienced a spike of 78% in just 10 minutes, with a transaction volume of only about 450,000 USD, yet leveraged liquidations hit hard.

On March 24, the crash began. Within 72 hours, SIREN dropped 71% from its peak, with a market cap shrinking from 2.2 billion USD to 740 million USD. Some on X dubbed it "the biggest scam of 2026."

This performance had a key detail missing from GPS: Binance adjusted the weights of the exchanges in the SIREN futures price index twice, attempting to reduce the impact of singular exchange manipulation. This indicates that Binance itself recognized that there was a problem with the market.

GPS was the beginning, MOVE was an upgrade, and SIREN was a complete public humiliation, happening on futures contracts listed by Binance itself.

Historically, Binance's handling method has been post-event law enforcement: freeze accounts after an incident, confiscate illicit profits, delist market makers. This approach can quell public opinion in a single incident, but after three incidents including SIREN, the question changed. The market began to ask: are you clueless, or are you just pretending not to know?

This was the true issue that the announcement on March 25 aimed to address. It was not about regulating market makers; it was about rebuilding their own credibility.

The Power Hidden in the Rules

Upon carefully reading this announcement, the six "red flag behaviors" listed by Binance have already covered the entire toolkit of active market makers: aggressive selling that conflicts with token release plans; unilateral sell orders; cross-platform coordinated selling; anomalously high trading volumes that contradict price movements; and abnormal price fluctuations due to insufficient liquidity.

Each point precisely depicts the cases of GPS, SHELL, and MOVE.

But more crucial is the understated sentence behind the rules: Binance will take swift and decisive actions against any improper conduct, including blacklisting market makers.

In Binance, what does being blacklisted mean? Web3Port has already demonstrated it - account frozen, all illicit profits confiscated, and future market-making activities on Binance banned. For a market maker dependent on the Binance platform for survival, this is essentially the death penalty in the industry.

This is the core of this announcement, and the least discussed part: Binance is formalizing the discretionary power they had quietly exercised previously through the form of rules.

Previously, Binance's response was "emergency handling after discovering issues"; now, Binance's response is "legitimate law enforcement in accordance with explicit rules". The nature is completely different. The former is reactive firefighting, while the latter is proactive deterrence.

And the targets of this deterrence are not just market makers.

The new rules require token project teams to disclose the identities, legal entities, and contract terms of market makers to Binance, prohibiting profit-sharing agreements and guaranteed return arrangements. This means that every project team wanting to list on Binance must now put their interests and arrangements with market makers before Binance's view.

Who is your market maker? How are contracts signed? Is there a profit-sharing agreement? Is there a guarantee?

The answers from the project teams will determine whether they can list their tokens and whether they can continue staying on Binance.

What the Rules Can and Cannot Solve

Returning to reality: can these new rules fundamentally cure the chaos of active market makers?

The honest answer is: most likely not.

What Binance can regulate is the behavior occurring on the Binance platform. However, the operations of active market makers are often cross-platform coordinated, pulling up on platform A and dumping on platform B, with on-chain funds flowing through multiple dummy addresses, making it difficult for a single exchange's monitoring to form a holistic perspective.

The more fundamental issue is that the token distribution mechanism itself hasn’t changed. As long as project teams continue to use "free tokens in exchange for market-making services," and as long as market makers can still use zero-cost chips as ammunition for disposal, the harvesting motive of active market makers will not disappear. Changing names, shells, or platforms, the game will continue.

A real loophole in the design of Binance's new rules is: Is the blacklist public? A non-public blacklist hangs like a sword over market makers, but only Binance knows which way that sword swings.

Crypto Brave (@cryptobraveHQ) stated after the Binance announcement: “This move feels more like a disclaimer from the platform, as the platform has always been aware of such events in the past, present, and future. Active market making is illegal in any jurisdiction, and reporting materials should be simultaneously submitted to relevant regulators and law enforcement, rather than merely stopping at the level of internal review.”

This hits the nail on the head.

Binance's internal blacklist is not enough on a legal level. Real accountability requires regulatory intervention and law enforcement agencies, not just the exchange acting as a judge.

The industrial chain of active market makers will continue to operate in the bear market, but the costs will rise, the risks of being caught will increase, and the pressure of being publicly named will intensify. This is about the most that the industry can strive for at present.

Retail investors need to understand: understanding the logic of market making does not mean you can win this asymmetric information war. But at least, you now know who the referee is in this game, who the players are, and who the chips on the table belong to.