Binance, the world’s largest cryptocurrency exchange, has reportedly frozen $2 million of funds linked to a suspected insider trader. The announcement was made by CZ, the CEO of Binance, in response to a tweet by a cryptocurrency and finance researcher known as FatMan.
The FatMan had claimed that on-chain data revealed the covert operations of a Binance insider who had front-run the exchange’s listing pumps of multiple altcoins. The insider had allegedly booked a seven-figure profit, leaving a trail for others to follow.
The researcher pointed to two wallets (0xd23 and 0x51) that had made prescient trades on FXS and TVK, respectively, shortly before the coins were listed on Binance.
The full research, conducted by @spssnft, analyzed 16 instances of potential insider trading before and after Binance listings, with a net profit of about $1.4 million. Insider trading can have a significant impact on retail investors, as it can cause profitable trades to become unprofitable and distort market prices.
CZ responded to the allegations by thanking the researcher for bringing them to his attention and stating that Binance had frozen the funds associated with the suspicious wallet before the tweet was made. He also invited others to report potential leaks or insider trading to help maintain free and fair markets.
Binance Insider Trading: Overlords Report
The tweet also cites an earlier piece by Overlords, which analyzed Binance insider trading dating back to early 2020. The report identifies several source wallets used by insiders to buy altcoins shortly before they were listed on Binance. The wallets tracked by Overlords made a total profit of $103,000 from insider trading in three projects (FXS, MANTRA DAO, and PERP).
For FXS, the insider purchased a total of 50.21 ETH and sold for a total profit of 46 ETH ($82,663 at that time). For MANTRA DAO, the insider purchased 20 ETH and sold for a total profit of 7.24 ETH ($13,756 at that time), while for PERP, they purchased 100 ETH and sold for a profit of 5.63 ETH.
Insider trading poses a notable challenge in the cryptocurrency market by eroding exchange confidence and disrupting market prices.
The exchange CEO’s reaction to the accusations indicates a serious approach to addressing such claims and a willingness to adopt measures against insider trading. Nonetheless, further efforts are necessary to thwart insider trading and rebuild investor trust in the cryptocurrency market.
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