Binance urges low-market-cap projects to increase liquidity due to worries regarding potential market manipulation

Crypto News– Binance is actively encouraging cryptocurrency projects with tokens of low trading liquidity on its platform to take measures in order to enhance trading activity.

Binance urges low-market-cap projects to increase liquidity due to worries regarding potential market manipulation

Within the last week, Binance staff have initiated communication with various projects, inquiring about their affiliations with market makers and whether they would contemplate contributing funds to Binance’s savings initiatives. Excerpts from messages obtained by The Block reveal that Binance specifically discussed the possibility of allocating 1-5% of their circulating tokens to Binance’s savings accounts to accrue interest. Similar outreach details have also circulated on Twitter through shared screenshots.

The messages further indicate that Binance sought clarification from these projects if they lacked affiliations with market makers or had no intention of participating in the savings products initiative. A spokesperson from Binance clarified that this outreach is a component of an ongoing risk management strategy. It targets a select number of cryptocurrency projects whose listed tokens on the exchange possess either lower-liquidity trading pairs or a comparatively smaller market capitalization within the broader market landscape. These characteristics, as the spokesperson elucidated, could potentially expose users to risks, which notably encompass the threat of market manipulation.

The spokesperson articulated, “Our risk management outreach primarily aims to guide project teams towards taking recommended measures to bolster their liquidity safeguards. Collaborating with market makers serves as one avenue to enhance such safeguards.” Market makers function as providers of liquidity, committing to purchase assets at designated prices to ensure smooth operation of exchanges.”