- Binance reveals that users are selling accounts.
- The incentive comes from Binance’s fee structure.
- The exchange will offer rewards for reports.
Crypto exchanges are constantly looking for ways to attract traders to their platforms. One of the tactics they use is giving specific benefits to large volume traders, or big holders on the platform, including lower fees and higher yields. However, these tactics can backfire, as Binance found out.
The biggest crypto exchange spotlighted its users buying and selling accounts to take advantage of the exchange’s fee structure. As a result, it announced a crackdown on the practice.
Binance Cracks Down on Account Sales
As users try to take advantage of Binance’s scaling fees, the exchange is not having any of it. On Thursday, June 26, Binance announced stringent measures to curb the unauthorized sale accounts, which users are doing to take advantage of Binance’s fee structure.
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In response, Binance has upgraded its automated monitoring systems to detect such activity. The platform will now investigate suspicious behaviors more rigorously, including multiple accounts from a single IP address and posting about sales on online forums.
The exchange is also leveraging its users, by offering rewards for verified reports of unauthorized account sales. It is unclear whether this will be enough, as account sales and buying can be lucrative for users.
Why Binance Users Are Buying and Selling Accounts
The practice of selling accounts enabled buyers to bypass standard exchange fees and get better API yields. They take advantage of Binance’s fee structure, which favors large-volume buyers. Binance wants to attract these buyers to its platform by offering them better fees.
When a trader buys an account or a sub-account with large volumes, they can get lower fees. For instance, the standard trading fee on Binance is 0.10%, but it goes down for higher-volume traders. These fall all the way to just 0.0120% in maker fees and 0.0240% in taker fees.
However, selling one’s own account also comes with risks. Binance explains that users risk being implicated in illegal activity if they sell their accounts to the wrong person. Crucially, account sales also hurt Binance’s bottom line. This is why, understandably, the exchange is cracking down hard.
On the Flipside
- Binance’s efforts to stop account sales are not new. In November 2023, the exchange published a blog post detailing the risks of account sales.
- Most exchanges charge big players lower fees, raising questions about fairness. However, as exchanges rely on transaction fees, they want to attract as many of these high-volume traders as possible.
Why This Matters
Binance’s new policy shows the risks of pricing segmentation, and how users can take advantage of it. It also showcases how platforms have a hard time tackling misuse and security risks for users.
Read more about Binance’s legal issues in India:
Binance Faces $2.25M Fine for Violating India’s AML Laws
Read more about the latest crypto-friendy bill:
Bitcoin for Paying Taxes? Here’s the Bill to Make It Happen
