Binance Cracks Down on Insider Trading, Suspends Employee

Binance has suspended a staff member following an internal investigation into allegations of front-running trades using insider information. This incident marks one of the rare occasions in which the company has publicly revealed details of a staff member’s violations.

The announcement, made on Monday via the official Binance Wallet X account, comes amid growing scrutiny of the industry’s ethical practices. 

Insider Trading at Binance: Employee Suspended Following Probe 

According to Binance Wallet’s statement, the investigation was triggered by a complaint received by its internal audit team on March 23. A related post by Wu Blockchain on the same date provided further details about the accused person. 

“A suspected Binance Wallet BD employee, Freddie Ng, has realized a profit of $113k and an unrealized profit of $200k through trading UUU on the BSC,” the post read.

The post further detailed that an address reportedly funded by freddieng.bnb purchased 24.1 million UUU tokens for $6,227. A partial liquidation followed, and the person sold 6.0222 million of these tokens across related addresses.

This yielded a profit of $113,600. The remaining 18.095 million tokens were still held across nine addresses. This represented an unrealized profit of approximately $200,000.

Binance Wallet’s investigation revealed that the staff member had previously worked in a business development role at BNB Chain. The accused allegedly used expertise in on-chain projects and prior knowledge of a project’s Token Generation Event (TGE) to profit from it.

Having joined the Wallet team a month ago—a unit with no ties to the project—the person bought tokens via multiple wallets before the announcement. After the project’s official token launch announcement, the employee sold some for significant gains, retaining others with high unrealized value. 

“This behavior constitutes front-running based on non-public information obtained from his previous role and is a clear breach of company policy,” the statement noted.

Binance Wallet noted that no evidence suggests broader insider trading within its team. They framed the incident as an isolated case tied to the individual rather than any systemic breach within the organization.

Moreover, the team swiftly suspended the employee and pledged to cooperate with legal authorities in the individual’s jurisdiction. The company emphasized its commitment to transparency and fairness.

“At Binance, we uphold a user-first principle and are committed to transparency, fairness, and integrity. We have zero tolerance for any misconduct. We will continue strengthening internal controls, refining our policies, and ensuring incidents like this do not recur,” they added.

To encourage community oversight, Binance awarded $100,000 to four whistleblowers who reported the issue through its official channel. 

Meanwhile, the incident has sparked broader discussions about ethical practices in the crypto industry. Colin Wu, founder of Wu Blockchain, highlighted the rarity of the situation.

“Binance seems to have disclosed details of employee insider trading for the first time,” he wrote.

Wu also pointed to several key issues. He stressed that the discovery of the problem was largely dependent on rare on-chain and off-chain evidence. Wu raised concerns that, without this evidence, the issue might have gone unnoticed or remained hidden. 

He also referred to a disclosure by Binance co-founder Yi He. In an AMA, she revealed that the team had internally reviewed more than 120 individuals over the past two years, firing over 60 for violations. This suggested the possibility of other undisclosed cases. 

Lastly, Wu pointed out that while Binance is known as one of the strictest exchanges in the industry, it’s unclear how other platforms compare in enforcing similar standards.