Insider Trading Scandal at Binance, employees Face Severe Sanctions

Stay connected with BizTech Community—follow us on Instagram and Facebook for the latest news and reviews delivered straight to you.

Binance is back in the spotlight after an employee allegedly engaged in insider trading. The scandal came to light thanks to reports from the crypto community, which triggered an internal investigation by Binance. As a result, the employee was proven to have used confidential information from his previous position at BNB Chain to profit through illegal transactions.

What is Insider Trading?

Insider trading is the practice of trading assets, such as stocks or crypto tokens, based on confidential information that has not been announced to the public. This information is usually obtained from a person’s position within an organization, giving them an unfair advantage over other investors. In the crypto world, cases like this often occur ahead of big announcements, such as token launches or project integrations.

Chronology of the Scandal at Binance

According to the Binance Wallet investigation team, the perpetrator was an employee who had only joined a month ago. Previously, he worked as a business developer at BNB Chain, a division affiliated with Binance. Although in his new position he did not have direct access to sensitive data, he allegedly used knowledge from his old role to engage in front-running—buying assets before the official announcement to reap profits.

The investigation revealed that this employee bought large amounts of tokens through several linked wallet addresses. This activity occurred before the Token Generation Event (TGE), an important moment in the launch of a new token. “This action clearly violates our internal rules,” the Binance Wallet team said in a statement on March 25, 2025.

In a swift response, Binance fired the employee and reported him to the authorities for legal proceedings. In addition, the company awarded US$100,000 to four whistleblowers from the community who helped uncover the case. “We value the role of the community and are committed to sharing the prize fairly,” they added.

Who is the Culprit Behind the Scandal?

The crypto community suspects the culprit is Freddie Ng, former operational manager of BNB Chain. This suspicion arose after an X user named “py” uploaded screenshot evidence on March 23, 2025. The evidence shows a wallet associated with Ng making US$112,000 in profits from the UUU token, an asset from the uDEX One project that focuses on social trading.

Even more suspiciously, the wallet received funds from another address believed to belong to Ng. Interestingly, the day after the community began to delve into the case, uDEX One announced an integration with Four.meme, Binance’s launchpad platform. This sparked speculation that the perpetrator was exploiting internal information to anticipate an increase in the value of the token.

Another Insider Trading Case

This case is not the first in the crypto industry. In 2023, Ishan Wahi, a former Coinbase manager, was convicted of leaking confidential information about a token listing to his brother. He used the data to buy assets before the official announcement, reaping huge profits. Similar cases are now a warning for crypto platforms to tighten internal oversight.

Impact on Binance and the Crypto Industry

The scandal adds to the burden on Binance, which has often been criticized for regulatory compliance issues. With the strict spotlight of global regulators, the insider trading incident could worsen the company’s reputation. Binance has promised to strengthen internal policies, increase transparency, and improve oversight systems to prevent similar cases.

However, community confidence does not seem to have recovered. Many question whether Binance’s measures are sufficient to eradicate fraudulent practices within the organization. “Is this just the tip of the iceberg of a bigger scandal?” asked one X user. This question reflects the skepticism that still hangs over the crypto giant.

Why is Insider Trading Dangerous?

Insider trading damages market confidence because it creates unfairness for ordinary investors who do not have access to confidential information. In the young and under-regulated crypto ecosystem, this practice can hinder mass adoption and draw the attention of regulators to enforce stricter rules.

Binance is now at a crossroads: prove its commitment to integrity or face greater consequences from the community and the law. How will they move forward? Only time will tell.