Investigation Launched Over Suspected Insider Information Abuse
Binance announced on Monday that it initiated an internal investigation on December 7 into an employee suspected of exploiting access to insider information. The allegation involves the employee using an official Binance Futures social media account for personal financial gain.
In an X post, the exchange detailed that its audit team received a report claiming the employee utilized non-public information to craft a post on the official Binance Futures X account. This post was allegedly made less than a minute after a specific token was issued on the blockchain.
The employee in question was immediately suspended. Binance stated that it has also contacted authorities in the employee's jurisdiction to pursue potential legal action. Cointelegraph reached out to Binance for further details regarding the cryptocurrency involved and the profit made, but had not received a response by the time of publication.
Binance Emphasizes Whistleblower Role and Bounty Program
The exchange is reinforcing its reliance on whistleblowers as a governance mechanism. Binance confirmed that its promised $100,000 reward will be distributed among several users who submitted the earliest valid reports through its official audit@binance.com channel. These tips were subject to verification and deduplication.
Binance stressed that only reports submitted via its dedicated internal channel are eligible for bounties. This clarification comes despite some information about the incident also appearing publicly on X. The exchange urged its community to continue reporting suspicious activity.
The exchange reiterated its strict "zero tolerance" policy towards employees using their positions for personal benefit. Binance pledged to implement enhanced internal controls and process improvements to "close off all possible spaces for abuse" and prevent similar misconduct in the future. The incident is being used as an opportunity to demonstrate its commitment to suspending employees, cooperating with regulators, and compensating informants, rather than handling such cases internally and discreetly.
This case highlights the speed at which whistleblowers can identify suspicious patterns in on-chain activity and social media posts. It also demonstrates how exchanges can effectively leverage this information through structured bounty programs.
Previous Incidents of Alleged Insider Trading at Binance
This situation is not the first instance where a Binance employee has faced accusations of abusing their position. In March, Binance Wallet announced the suspension of a staff member and the initiation of an investigation. This followed whistleblower allegations that the employee had used insider information concerning an upcoming token generation event to execute pre-emptive trades.
The employee in that case had reportedly purchased a substantial amount of the token using multiple linked wallets before the public announcement. Subsequently, they sold a portion of their holdings for significant profits once the launch became public.
Binance is not the sole exchange to encounter insider trading allegations linked to staff access and market-moving information. In 2022, U.S. authorities charged a former Coinbase product manager and two associates. They were accused of using confidential knowledge of upcoming token listings on the exchange to trade at least 25 different assets before public announcements, generating over $1 million in illicit profits.