- One of the biggest cryptocurrency exchanges in the world, Binance, recently froze $2 million worth of assets related to a claimed insider trading case.
- The action was taken in reaction to an Ontario Securities Commission investigation into the exchange’s adherence to securities laws.
The biggest cryptocurrency exchange in the world, Binance, is said to have frozen $2 million in funds connected to a rumoured insider trader. CZ, the CEO of Binance, made the announcement in reaction to a tweet from FatMan, a cryptocurrency and finance researcher.
However, This is not the first time that Binance is struggling with insider trading suspicions. In January, Coinbase director accused Binance of insider trading.
FatMan Terra claimed in a thread on Twitter on March 28 that an unnamed person front-ran several Binance altcoin listings to make a seven-figure profit. The crypto influencer explained how the trader’s “covert operations” were revealed using on-chain data.
According to The FatMan, on-chain data exposed the covert activities of a Binance insider who had cheated on the exchange’s listing pumps for several different cryptocurrencies. According to reports, the insider made a seven-figure profit and left a paper path for other parties to follow.
In one instance, the insider funded a wallet named “0xd23” with $53,000 before purchasing Frax Share’s FXS on Uniswap over the course of six days in tiny batches. After Binance listed the FXS token three days after the trader’s previous buy, they would subsequently liquidate all of their holdings at a profit.
In a different instance, the investor purchased Virtua (TVK) for 131 Ethereum two days ahead of its Binance listing. After the token’s worth increased, the trader earned 277 ETH from its sales.
Since these transactions were carried out from a number of addresses connected to Binance workers, insider trading may have taken place. Although the claims have not been proven, Binance moved quickly to freeze the disputed assets to stop any further trading.
According to reports, the total profits realised in the cases came to close to $1.4 million. The insider dealer may or may not be related to Binance, but he had access to inside information.
Changpeng Zhao replied to the tweet by saying that they had located the location and the roughly $2 million connected to it. The CEO observed that after the account was frozen, the owner never requested its reclaim.
In a comment on the subject, Binance also denied any wrongdoing on its part and said it had a “zero-tolerance” policy for insider trading. The exchange agreed to cooperate completely with any inquiries into the situation and to take suitable action against any staff members discovered to have engaged in insider trading.
The current insider trading allegations on Binance could cost the crypto giant a lot in terms of market reputation and credibility amid regulatory wrangling over the exchange and its operation.