Binance Staff Suspended for Insider Trading Scandal

Binance has suspended an employee for allegedly using confidential company information to profit from a token launch. The company’s internal audit team announced on Monday that the staff member engaged in front-running trades before the public release of the token. Binance described the actions as a violation of company policies and stated that immediate action was taken.

Employee Accused of Using Non-Public Information

According to Binance, the employee obtained details about an upcoming token launch from their previous role at BNB Chain, which was formerly called Binance Smart Chain. The individual allegedly used several wallet addresses to buy the tokens before the announcement, taking advantage of insider knowledge to secure a better position in the market.

After the token launch was made public, Binance stated that the employee sold a portion of their holdings, making a profit while still holding tokens that had increased in value. Binance labeled the activity as “front-running based on non-public information,” which it called a violation of internal company rules.

Investigation and Company Response

Binance began investigating the case after receiving complaints on March 23. The internal audit team reviewed the matter and found that the employee had used sensitive information from their past role to trade unfairly.

However, Binance stated that its investigation did not find any other cases of insider trading within the Wallet team. Further, the company said it does not have any business relationship with any of the parties involved in the project allegedly relating to the misconduct. Binance did not disclose the employee’s identity or the name of the token involved.

The suspended employee had recently moved to Binance’s Wallet team after previously working in business development at BNB Chain. Binance emphasized that it is committed to enforcing strict policies and working with authorities if necessary.

Whistleblowers Receive Rewards for Reporting

Binance confirmed that four individuals who reported the misconduct through its official channels were rewarded. They were paid under the program of the company, which incentivized its employees to report unethical behavior, and each received a share of the $100,000 they were given.

Earlier in February, Binance co-founder Yi He announced a bounty program that offers up to $10,000 for employees who report insider trading or unauthorized information leaks. To prevent the reoccurrence of such a malign event, the company has been working to strengthen the internal standards of its compliance.

Crypto Industry Faces Ongoing Insider Trading Issues

The Binance situation resembles a 2023 insider trading controversy related to Coinbase, in which a previous manager was discovered sharing secret token-listing details. After being convicted of insider trading, the person had to face legal consequences.

Insider trading in the cryptocurrency sector has also been under close monitor from authorities around the globe. Binance has implemented actions to strengthen its internal regulations and stop employees from exploiting confidential information for personal benefit.