Trader Peter Brandt Says Binance Is Abusing Customers, Trading Against Clients. Image credit: Chinnapong / iStock Bangkok, Thailand, July 1, 2021: Cryptocurrency on Binance trading app: Bitcoin, Binance coin, Ethereum, Dogecoin, Cardano
Veteran crypto trader Peter Brandt said he believes that the world’s largest cryptocurrency exchange is “abusing” its customers and trading against them.
Brandt, the CEO of forex global trading firm Factor LLC, accused Changpeng “CZ” Zhao, the head of Binance, of fraud.
Brandt recently took to Twitter to express his discontent with Binance and the tweet received a mixed reaction, which prompted Brandt to clarify his statements.
After Zhao tweeted that he needs “a body that sleeps less”, Brandt accused Binance and its CEO of abusing its customers.
“Given how you abuse your customers it is surprising you sleep at all,” Brandt tweeted in reply.
Brandt later explained that his issue with crypto exchanges in general, including Binance, is that they deal “against customer orders.”
Binance defended itself in a statement to Insider and said that it has a zero-tolerance policy for insider trading and a strict ethical code related to any type of behavior that could have a negative impact on its customers or the industry.
Binance added that there is a longstanding process in place followed by its security team to investigate and hold violators accountable, with immediate termination being the minimal repercussion.
Given the extreme leverages allowed by the futures market, traders bet against the odds, hoping to get higher returns and taking high risks by borrowing from the exchange to get better profit.
However, if the trader’s bet gets through in the highly volatile market, then the exchange will bear losses.
Brandt claims that to counter this, trading platforms are being intentionally “frozen” during hikes, preventing retail players from closing profitable deals.
“My gripe vs. crypto exchanges goes far deeper than bad fills – it deals with trading against customer orders way outside daily range and not reporting the price discovery. We’d have been jailed,” Brandt tweeted, referring to punishments for violating regulations governing traditional trading firms.
When cryptocurrencies suddenly began to plunge one after another in mid-May, Binance “froze,” throwing its users into the midst of the crypto apocalypse.
The exchange froze for more than an hour, costing thousands of traders their fortunes. More than 700 users filed a lawsuit against Binance in response.
At least twice in November 2021, Binance suspended and then resumed withdrawals of all currency on its website, raising questions about whether it is acting more like a casino than a currency exchange and selling more crypto than it has access to. A “temporary suspension” by Binance in November affected all its users, in line with what other exchanges such as Coinbase did.
U.S. regulators are investigating whether Binance or its staff made money by taking advantage of its customers and whether it was trading on customer orders before executing them.
READ MORE: Investor Ross Gerber: It’s Time For SEC To Investigate Binance, Customers Locked Out Of Accounts
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