If both GPS and Shell have market maker issues, it is not an isolated case; this is clearly the tip of the iceberg of industry problems.
On March 4, Binance announced the launch of the Web3 security infrastructure project GoPlus Security (GPS), with the token price soaring to $0.15 at one point, but then plummeting 75% within 72 hours, reaching a low of $0.05, and continuing to set new lows, reporting $0.0391 at the time of writing.
On March 7, Binance issued an announcement stating that the sharp drop in GPS was caused by malicious selling by a certain market maker. Data showed that from March 4, 21:00 to March 5, 17:55, this market maker sold a total of 70 million GPS but never placed a buy order, ultimately profiting approximately 5 million USDT.
Binance has temporarily frozen the accounts of the market maker, and the incident is still ongoing.
The Dilemma of Market Makers Behind the Collapse of GPS and SHELL
When market selling pressure is too high, market makers, as makers, continuously execute buy orders, passively taking on inventory. If prices continue to fall, this inventory will significantly shrink, leading to unrealized losses.
Dynamic adjustment is difficult
Market makers usually lower the purchase price (e.g., from $1 to $0.8), but if the market collapses too quickly, they cannot adjust in time. GPS fell sharply from $0.14 to $0.07, which is clearly not normal market behavior. In this situation, the market makers have no profits to pick up, losses increase sharply, and the market sell orders are far below their holding costs.
On March 10, Binance founder Zhao Changpeng (CZ) retweeted the tweet from X blogger Kuai Dong, seemingly confirming that Whisper is indeed the market maker previously banned by Binance. However, since CZ has stepped down as CEO and does not participate in daily operations, the authenticity of his statements remains questionable. As of the time of writing, Binance has yet to respond officially.
On the evening of March 9, Kuai Dong exposed insider information about market makers, indicating that the market makers for GoPlus (GPS) and MyShell (SHELL) are the May Liu team. The complete trading chain behind involves crypto VC Spark Digital Capital, Web3 incubator Web3Port, and market maker Whisper.
Operating model:
Spark operates as a VC, acquiring project tokens through market outsourcing and FA business.
After industry competition increased, it turned to the Web3Port incubator model, providing project packaging in exchange for 1-3% of tokens.
Eventually established the market maker Whisper, using market making to create an exit window for the tokens in hand.
However, on-chain data from the community provides another statement, suggesting that the market maker for GoPlus (GPS) may be QCP Capital—a crypto finance company founded in 2017, headquartered in Singapore, founded by Darius Sit and Joshua Ho, focusing on quantitative trading and derivatives strategies, regulated by the Monetary Authority of Singapore (MAS).
Currently, it remains a mystery who the market maker banned by Binance is.
Binance's handling measures:
On March 9, Binance issued an announcement stating that the market makers for GPS and SHELL had engaged in market violations and took the following measures:
Banning the market maker's account, prohibiting any market-making activities on Binance.
Confiscating the related earnings to compensate users of the GPS and SHELL projects (specific plans to be announced by the project team).
As the insider information is exposed, the Binance ban event is still fermenting, and the market's doubts about the market makers' trading behavior are intensifying.
Today's article ends here. Currently, we are in a bull market with a lot of excitement. We share passwords every day. If you don't know how to operate in a bull market, feel free to follow along. We can share strategies for bull market spot trading without charge. Let's embrace the bull market, improve our win rates, and say goodbye to being trapped at high positions.
#GPS老鼠仓 #SHELL
