​Binance to launch its manipulation prevention tool for spot trading

What’s new? On January 26, crypto exchange Binance will launch the Self-Trade Prevention (STP) function for spot trading. STP will provide users with tools that will eliminate the possibility of matching and executing orders of the same trader. The function will also allow users to run trading strategies with a guarantee of no “self-trading” and save on fees for unnecessary trades.

Binance Blog

Self-trading happens when a user or a group of related users trade with themselves. When self-trading is done intentionally to create an illusion of trading activity, it can be considered a form of market manipulation. In this, not all self-trades are deliberate or intentional. Some users, running a number of different strategies simultaneously, may end up having two of their own orders matched by accident.

What else is known about STP? The function will allow Binance API users to set protections that will prevent any of their orders from matching each other. Without STP, there is the possibility of unintentional trading with oneself. For example, when separate trading units of the same firm, using different strategies but the same account, accidentally post orders that trade with each other. In such cases, the STP function will automatically block the execution of the trade.

Traders find it difficult to coordinate trading strategies in the market, so some traditional and crypto exchanges offer the Self-Trade Prevention function to assist their clients, Binance noted.

The blog also highlights that Binance’s market surveillance team closely monitors activity to identify deliberate self-trading and any other forms of market manipulation. In addition, Binance has extensive tools to track illegal transactions and investigate violators.

Earlier, crypto exchange Huobi also announced that it would crack down on “rat trading,” which is designed to artificially inflate demand for an asset in order to increase its value.

In October, BanklessTimes reporters said that fake BTC transactions in 2022 exceeded 51% of the asset’s total daily trading volume on exchanges. A significant part of them was so-called “wash trading” aimed at increasing the price of the asset. Forbes also reported that Bitcoin platforms overestimate bitcoin trading volumes and have little control over “wash trading.”