On Monday, Binance announced that it had initiated an internal investigation on Sunday regarding an employee suspected of misusing access to confidential information by posting from an official Binance Futures social media account for personal benefit.
The exchange revealed in an X post that its audit team had received a report alleging that the employee utilized non-public information to create a post on the official Binance Futures X account “less than a minute” after the token was launched onchain.
The implicated employee was promptly suspended, and Binance confirmed it has reached out to authorities in the employee’s jurisdiction to explore potential legal action.
Cointelegraph sought additional information from Binance regarding the cryptocurrency involved and the profits made, but had not received a response by the time of publication.
Binance encourages whistleblowers
The exchange is actively promoting whistleblowing as a governance measure, affirming that its promised $100,000 reward will be distributed among several users who filed the earliest valid reports via its official audit@binance.com channel after those tips were verified and sorted.
Binance emphasized that only reports submitted through this internal channel are eligible for rewards, despite some details of the incident being publicly accessible on X, and urged the community to keep reporting suspicious behavior.
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The exchange reiterated its “zero tolerance” policy regarding employees exploiting their roles for personal gain, vowing to enhance internal controls and improve processes to “eliminate all potential avenues for abuse” and prevent similar incidents in the future. Binance leveraged this situation to demonstrate its commitment to suspending employees, collaborating with regulators, and compensating informants instead of managing such issues internally.
This case illustrates the rapidity with which whistleblowers can detect suspicious trends in onchain activity and social media postings, and how exchanges can harness this data through organized bounty programs.
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Familiar scenario for the Binance team
This is not the first occasion where a Binance employee has been accused of misusing their position. In March, Binance Wallet stated it suspended a staff member and began an investigation after whistleblowers claimed that the employee leveraged insider information about an upcoming token generation event to front-run trades.
The employee acquired a significant quantity of the token through multiple linked wallets prior to the public announcement and then sold part of the holdings for considerable profits once the launch occurred.
Binance is not alone in facing insider trading accusations related to employee access to sensitive market information. In 2022, U.S. authorities charged a former Coinbase product manager and two associates, alleging they used privileged knowledge of forthcoming token listings on the exchange to trade at least 25 assets before public announcements, generating over $1 million in illicit profits.
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