Binance staff member under investigation for suspected insider trading

Binance has taken action against an employee following an internal investigation that found evidence of insider trading using information obtained from a prior position.

On March 25, Binance disclosed that it started investigating the issue on March 23 after receiving a report about suspicious trading behavior related to a recent token launch.

The employee in question, who had recently joined the Binance Wallet team, allegedly used confidential information from their previous role at BNB Chain. They had knowledge of a project preparing for a Token Generation Event and anticipated significant community interest.

According to Binance, the employee used multiple connected wallets to purchase a large quantity of the project's tokens before the public launch. After the announcement, they sold a portion of their holdings for a substantial profit.

Upon discovering these findings, Binance immediately suspended the staff member and is considering further disciplinary measures. The exchange also stated that it would cooperate with authorities in the relevant jurisdiction and take legal action in accordance with applicable laws.

Binance did not disclose the name of the employee involved but noted that the investigation was initiated due to allegations raised on X earlier this week.

Users on X highlighted suspicious wallet activity linked to a former BNB Chain operations manager, Freddie Ng, who had recently joined the Binance Wallet business development team.

A persistent problem in the industry

Allegations of insider trading are not uncommon in the crypto industry and continue to be a significant challenge for an industry founded on transparency and decentralization.

Insider trading can put retail investors at a severe disadvantage, often depriving them of potential gains. Moreover, such practices can distort market dynamics and erode confidence in otherwise promising projects.

Similar cases, such as the 2022 Coinbase incident where former product manager Ishan Wahi shared upcoming token listings with his brother Nikhil Wahi and friend Sameer Ramani, demonstrate that even major players are susceptible to such misconduct.

Despite the serious legal repercussions, these actions continue to occur.

Binance has faced allegations of insider trading multiple times in the past. Last year, the exchange conducted an internal investigation into alleged insider trading involving the Solana-based meme coin Book of Meme (BOME).

Earlier this year, automated market maker Aerodrome Finance suspended two of its contributors mere hours after detecting suspicious trading activity during the launch of Venice's VVV token.

These unethical practices are not exclusive to trading platforms. Last year, Mystiko Network faced insider trading allegations during its second airdrop after on-chain data revealed that millions of tokens were channeled to newly created wallets.

More recently, LIBRA, a meme coin endorsed by Argentine President Javier Milei, was embroiled in controversy following reports that insiders had prior access to the token, enabling them to profit over $110 million shortly after its launch.