Repeated Incidents—Insider Trading Becomes a Tragedy for Crypto Exchanges

Author: Chloe, ChainCatcher

Recently, Binance has once again been embroiled in a scandal involving internal staff suspected of insider trading. On December 7th, a Binance employee exploited their position to promote a newly issued token on official social media, thereby profiting personally. Internal corruption incidents at Binance are not the first occurrence; similar cases happened as early as March this year. Despite official zero-tolerance policies and active responses, the market continues to criticize the proliferation of so-called “altcoins” turning into pump-and-dump schemes, and retail investors face not only institutional interests but also the risk of insiders exploiting their privileges for arbitrage.

Just after issuing a token, the official released a related post

On December 7th, a token called “Year of the Yellow Fruit” (abbreviated YEAR or “Yellow Fruit Year”) was launched on BNB Chain at 1:29. Less than a minute later, Binance Futures’ official X account @BinanceFutures posted a tweet, with text and images implying the token’s potential.

Data indicates that the token’s price surged over 900% after the post was published, reaching a peak of $0.0061, with a fully diluted valuation (FDV) hitting $6 million. Before press time, it had fallen more than 75.3% and now trades at $0.001507. The coincidental timing of the post has raised community suspicions that the employee who posted it was attempting to manipulate the market and profit from their position.

According to DLNews, the inspiration for the Yellow Fruit Year token originally came from a post by Binance’s official account on December 4th titled “2026: the year of the yellow fruit,” which quoted statements made by former Goldman Sachs executive Raoul Pal and Coin Bureau founder Nic Puckrin at Binance Blockchain Week, encouraging traders to “plant and expect a harvest,” aligning with the images and copy posted by the internal employee.

In response, Binance stated that an initial investigation confirmed that an internal employee was suspected of using their position for personal gain. The involved employee was immediately suspended, and Binance proactively contacted the relevant authorities in the employee’s jurisdiction to seek legal action. Additionally, rewards of up to $100,000 will be distributed evenly to all users who submit valid reports, according to the bounty promise.

It is awkward that, just one day before the incident, He Yi posted a statement saying that Binance employees are not allowed to participate in any token issuance or promotion, yet the very next day, an internal employee was caught publicly revealing insider information about token issuance.

This reflects a fundamental issue: since on-chain addresses do not require KYC, and with regulatory oversight lacking, exchanges find it difficult to monitor all employee activities—even with full surveillance of work computers and phones—leaving vast room for insider trading. Major exchanges like Coinbase and OKX have also experienced similar cases.

Two internal trading incidents in one year, internal risk control at the exchange faces challenges

In March, a Binance employee named Freddie Ng (former BNB Chain business developer, later joined Binance Wallet team) obtained early information that the UUU token was about to rise, and was suspected of trading on insider information. He used his small account wallet (0xEDb0…) to purchase approximately $312,000 worth of UUU tokens with 10 BNB, then transferred all tokens to a money laundering wallet (0x44a…).

When the token price was high, he sold the initial transaction via Bitget wallet, earning 181.4 BNB, equivalent to $110,000. The remaining UUU tokens were split into eight different addresses, each worth a few thousand dollars. However, investigation revealed that the funds in that small account wallet originated from his real-name wallet freddieng.bnb (0x77C…) 121 days earlier, exposing his involvement in the case.

After Binance’s investigation, the employee was suspended and handed over for legal processing, and the whistleblower received a $10,000 reward. These two incidents occurred only nine months apart, highlighting the internal control challenges faced by Binance.

However, Binance is not the only exchange with internal control issues. In 2022, U.S. authorities accused a former Coinbase product manager and two accomplices of trading at least 25 assets before their official listing, profiting illegally over $1 million by exploiting insider information.

Additionally, recent reports indicate that several Coinbase shareholders have filed lawsuits in Delaware courts, accusing CEO Brian Armstrong and director Marc Andreessen of leading efforts to hide information and personally profiting from stock sales.

Shareholders claim that Coinbase leadership was aware of serious issues within the company but deliberately or recklessly concealed information, artificially inflating the stock price. In early 2023, Coinbase reached a $100 million settlement with the New York Department of Financial Services over KYC and AML program vulnerabilities. Senior executives are accused of being aware of the issues during investigations but releasing misleading statements claiming compliance.

Furthermore, internal insiders reportedly learned as early as January this year about a serious data breach where hackers accessed sensitive customer data via third-party vendors. The breach was only disclosed publicly in May, a delay of several months, putting shareholders and investors at risk without their knowledge. During this period of concealment, senior executives sold about $4.2 billion worth of Coinbase stock at high prices. Plaintiffs argue that misleading statements and concealment of information directly inflated the stock price, allowing insiders to profit massively and potentially avoiding billions in losses.

Besides Binance and Coinbase, OKX has also recently exposed an internal anti-corruption case. According to a post by @BroLeonAus, a certain account made an unusual purchase of a token before an official announcement. This account rarely traded altcoins but suddenly bought in before the good news was released and quickly sold after, netting only about 10% profit, roughly $2,000. Initial internal investigation found no results, but months later, due to an internal transfer between this insider account and a senior employee’s account, it was discovered that it was linked to the employee’s wife account. Ultimately, OKX dismissed the employee.

If the employee’s wife operated on-chain or if there were no further internal transfers, this case might never be uncovered.

This indicates that publicly exposed cases are always just the tip of the iceberg. No matter how exchanges shout slogans, the intrinsic features of blockchain technology inherently facilitate insider trading.

While on-chain data is public, who can identify which addresses belong to exchange employees or related accounts among millions? In a regulatory vacuum, exchanges act as rule makers, enforcers, and beneficiaries simultaneously—this power structure itself seeds systemic risks. The so-called zero-tolerance policies and bounty mechanisms seem more like public relations masks; they only come into play when scandals are exposed and cannot be concealed. The undiscovered cases might constitute a much larger hidden part of the iceberg.