Easy money on Binance: another insider made $55.4K in just 20 minutes

Another insider trading incident on Binance became public and allowed an insider to earn $55.4K in just 20 minutes. The presence of insiders is unprofitable, neither for other ordinary traders nor for exchanges. Let’s examine the situation around this vicious practice on Binance.

 

What’s up?

Another case of insider trading by Binance has been established, according to @ScopeProtocol. This Twitter user discovered an extremely suspicious flash trade on the $RPL coin in which the alleged insider made a bold bet at the exact moment the coin was listed on Binance.

They ended up making $55.4K in just 20 minutes. The only reasonable explanation for this success is prior knowledge of the timing of the coin’s listing. Any new coin’s short-term spike in popularity (right after its listing) can be predictably profitable, which is precisely what the supposed insider took advantage of. The general scheme of this transaction, taken from the blockchain, can be seen in the screenshot:

What does Binance say?

This is a recent but not the only such case with Binance, where a trader’s extreme awareness makes him suspect of insider trading. This raises many questions for Binance, so the company is forced to respond to deflect suspicion away from itself. 

It appears that there is a pattern of Binance front-running over 18+ months

I found connected wallets that:
-Bought $900k Rari seconds before and dumped minutes after listing
-Bought ~78K ERN between June 17 and June 21 and sold right after listing announcement
-Did same w/ TORN https://t.co/yAolrfeHkO pic.twitter.com/VRq3vzfcgd

— Conor (@jconorgrogan) January 23, 2023

Here’s what has come to light about Binance’s self-regulation:

• He Yi, the co-founder of Binance, said that no employee of Binance, regardless of level, is allowed to conduct personal short-term cryptocurrency transactions and must hold the position for more than 90 days before trading. 
• Binance CFO Patrick Hillmann confirms these words, reporting that:

This has been a strict policy at Binance at least since I started here in 2021. We have an internal security team that monitors multiple platforms for possible employee trading activity and it is a zero tolerance policy. It is the quickest way to get fired here.

• When asked by Business Insider, a Binance spokesman responded:

“At Binance, we have a zero-tolerance policy for insider trading and a strict ethical code related to any type of behavior that could have a negative impact on our customers or industry.

There is a long-standing process in place that our security team follows to investigate and hold those accountable that have engaged in this type of behavior, immediate termination being minimal repercussion.”

Despite such statements, as this new episode shows, such stories continue.

https://twitter.com/nec_duke/status/1615799406908809217

Binance under the microscope of the authorities

Insider trading is possible only if the trader owns certain proprietary information (inside), which gives such a trader a significant competitive advantage over others. In English law, insider trading is closely related to the concept of conflict of interest. Such trading is prohibited in many countries of the Western world, particularly in the United States.

Bloomberg reports that Binance is being investigated by U.S. regulators for possible insider trading and market manipulation. Officials are probing whether the company or its employees profited from that access.

According to a Bloomberg report, the Commodity Futures Trading Commission, which regulates U.S. derivatives markets, is participating in the probe and has reached out to potential witnesses.

‌‌Suspicious Wallets Nearly Earned $1M on Binance Listings

The cryptocurrency ecosystem has been abuzz with insider trading. Wallet holders involved in these suspicious activities earn more than $1M.https://t.co/cWEMHxgZv6

— Cryptonewsland (@cryptonewsland) January 23, 2023

We have previously detailed that Binance is under massive investigation in the U.S., and the results could potentially blow up the market. Under the authorities’ watchful eye, Binance is playing with fire by allowing insider trading on its platform. Another scandal on this basis could provoke an aggressive response from law enforcement and, taking into account the importance of Binance in the ecosystem, will cause another panic in the crypto industry.