Potential illicit activities might be happening within the realm of one of the largest cryptocurrency exchanges in the world after whistleblowers revealed that a Binance employee is allegedly involved in insider trading.
Investigation Launched
Binance told its users that the crypto exchange conducted an internal investigation of possible misconduct in trading of one of its staff, saying that it acted on a complaint received by the platform’s Internal Audit team.
According to the complaint received on March 23, the crypto exchange’s staff is allegedly engaging in front-running trades “using insider information to gain improper profits.” Binance took the allegations seriously and launched a thorough internal investigation.
The preliminary investigation’s results revealed that there was “no insider trading related to Binance Wallet team.”
Image: Gemini Imagen
Binance added that at the time of the alleged incident, the member of the Binance Wallet team had no business relationship or collaboration with the project involved, saying, “Therefore, the exchange wallet team should not have access to any non-public information relating to the project.”
Misuse Of Information For Personal Gain
However, the investigators found that the individual was suspected of misusing prior role information for personal gain.
“However, we found that the employee previously held a business development role at BNB Chain before joining the Wallet team one month ago. Leveraging information from his former position as well as his familiarity with on-chain projects, the employee was aware the project was planning a Token Generation Event (TGE) and anticipated it would generate significant community interest,” the crypto exchange said in a post.
Armed with this information, the Binance employee bought a large volume of the project’s tokens using multiple wallet addresses. After the project’s announcement, the staff immediately offloaded a portion of his holdings to realize significant profits.
“This behavior constitutes front-running based on non-public information obtained from his previous role and is a clear breach of company policy,” Binance said.
Immediate Suspension
After it discovered its employee’s misconduct, Binance immediately suspended the staff while he waited for whatever disciplinary action would be imposed upon him.
“We will proactively cooperate with the relevant authorities in the employee’s jurisdiction and take appropriate legal action in accordance with applicable laws. Any associated assets will be handled in full compliance with applicable laws and regulations,” the crypto exchange assured.
Binance said that they remain committed to zero tolerance for any misconduct. “We will continue strengthening internal controls, refining our policies, and ensuring incidents like this do not recur,” the crypto firm noted.
“We welcome continued community oversight and encourage anyone with valid information to report via our official channel (audit@binance.com).”
Featured image from CNN, chart from TradingView
