Tech

Binance Suspends Wallet Team Member Following Insider Trading Probe

6 days ago
Bitcoin Ethereum News

TLDR

  • Binance suspended a wallet team member following insider trading allegations
  • The employee allegedly used non-public information from their previous BNB Chain role
  • The staff member purchased tokens before a Token Generation Event and sold for profit
  • Whistleblowers identified suspicious transactions, prompting an internal investigation
  • Binance is rewarding $100,000 to four whistleblowers who reported the violation

Crypto exchange Binance has suspended a staff member from its Wallet team after launching an internal investigation into claims of insider trading. The company announced on March 25 that the employee allegedly used non-public information from a previous role to make trading profits.

The investigation began on March 23 when Binance received reports about suspicious trading activity. Whistleblowers pointed to transactions that showed signs of front-running, a practice where someone trades based on advance knowledge of upcoming events that will affect prices.

According to Binance Wallet’s statement, the suspended employee joined the team last month. Before that, they worked in business development at BNB Chain, Binance’s blockchain network.

The company claims the staff member knew about an upcoming Token Generation Event (TGE) for a project. They allegedly expected this event would create high interest among crypto traders.

Binance says the employee used multiple linked wallet addresses to buy large amounts of the project’s tokens. This happened before any public announcement about the token launch.

After the announcement, the employee quickly sold part of their holdings. This sale earned them what Binance described as “high profits” from the price movement.

Trading Scheme Exposed

The investigation was prompted by claims circulating on social media platform X. Several users had identified suspicious transactions and wallet addresses that pointed to possible insider trading.

While Binance did not name the employee in its statement, social media users have pointed to Freddie Ng. According to his LinkedIn profile, Ng recently moved from a role at BNB Chain to Binance Wallet’s business development team.

One X user with the handle “py” shared transaction data showing profits of $82,400 from a token called U DEX Platform (UUU). The wallet making these profits was linked to another wallet that had been funded by an address named “freddieng.bnb.”

This address had been shared on Ng’s X account in the past. Transaction data shows the wallet sold holdings just minutes after the token debuted on March 23.

The token reached a peak value of $31.5 million before dropping in value. The timing of the sales suggests the trader had advance knowledge of the token’s launch schedule.

Binance said it has suspended the employee while it continues its investigation. The company stated it may take further disciplinary action based on its findings.

The exchange also plans to work with authorities in the relevant jurisdiction. Binance said it will pursue legal action against the employee based on applicable laws.

As a gesture of appreciation to those who reported the suspicious activity, Binance will distribute $100,000. This reward will be shared equally among four anonymous whistleblowers who contacted the company through its official reporting channels.

This case brings to mind a similar situation at Coinbase in 2023. In that instance, a former manager named Ishan Wahi admitted to leaking information about token listings to family members and contacts for trading purposes.

The Binance investigation found no evidence that other Wallet team employees were involved in insider trading. The company emphasized that the information used came from the employee’s previous role, not from their current position.

Source: https://blockonomi.com/binance-suspends-wallet-team-member-following-insider-trading-probe/