CZ Retweet Sparks Crypto Market Turmoil as Binance Stocks Plunge

On March 9th, Changpeng Zhao, commonly known as CZ, retweeted a post by Kuai Dong (@_FORAB) that alleged misconduct by the liquidity provider Web3Port. The tweet detailed a complex scheme involving several key figures and entities within the cryptocurrency industry. According to the allegations, May Liu and her team from Web3Port had established a "Binance-onboarding broker pipeline" that facilitated the flow of tokens from Spark Digital Capital to Web3Port and ultimately to Whisper.

The scheme began with Spark Digital Capital operating under the guise of a venture capital firm. Instead of providing traditional venture capital, Spark relied on outsourced market making and financial advisory (FA) business to support projects that had received VC investments. In return, Spark received free tokens from these projects. However, as the industry became more competitive in 2021 and 2022, project teams were no longer willing to give away tokens for free. This led Spark to shift to an incubator model, establishing Web3Port to provide project packaging and VC connections in exchange for 1-3% of tokens.

Despite this shift, relying solely on the incubator model was not profitable. Therefore, Web3Port established the liquidity provider Whisper, using liquidity provision as a facade to create an exit window for the free tokens they held. This system effectively became a complete pipeline from packaged funding to exit, with Binance retail investors becoming the ultimate buyers of these tokens. The allegations suggest that this pipeline was designed to benefit the key figures involved, at the expense of unsuspecting retail investors.

Prior to this news, Kuai Dong had stated that GSR is the passive market maker for GPS and SHELL, while Web3Port is the active market maker. This information adds another layer of complexity to the alleged misconduct, as it suggests that Web3Port may have been involved in manipulating the market to benefit their own interests. The retweet by CZ has brought significant attention to these allegations, and the cryptocurrency community is closely watching the developments in this case.