Binance, the largest crypto exchange, says it has suspended an employee for using inside information for personal gain.
The company said that after receiving a complaint about one of its employee’s front-running trades using insider information, they found that their Binance Wallet staff member had misused prior knowledge from a previous position at BNB Chain, a blockchain launched by Binance.
According to the exchange, the now-suspended employee leveraged information from their former position, as they were aware that an unnamed crypto project was planning a Token Generation Event (TGE), a process of launching and distributing a token.
"Prior to the project’s public token launch announcement, the staff member used multiple linked wallet addresses to purchase a large volume of the project’s tokens. Following the announcement, the staff member quickly sold part of his holdings to realize significant profits, while the remaining tokens retained considerable unrealized gains," Binance explained without providing further details.
The company stressed that this was front-running based on non-public information, which breaches company policy.
The individual was suspended "pending further disciplinary action," while the exchange also added that they "will proactively cooperate with the relevant authorities in the employee’s jurisdiction."
Binance also noted that four whistleblowers will share a reward of $100,000.
It's not the first time insider trading has become public in the crypto industry.
For example, in 2023, a US judge announced the first-ever sentence in a crypto insider trading case. Back then, Ishan Wahi, a former product manager at another major crypto exchange, Coinbase, was sentenced to two years in prison for providing Coinbase’s confidential business information about upcoming crypto listings to his brother and his friend so they could place profitable trades in advance of official listing announcements.
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