Binance freezes $2M from alleged insider trader

Binance CEO Changpeng ‘CZ’ Zhao said the exchange had frozen $2 million associated with a crypto address associated with an alleged insider trader.

In a March 28 Twitter thread, FatMan Terra said an anonymous individual front-ran several Binance altcoin listings to book a seven-figure profit. Citing on-chain data, the crypto influencer detailed how the trader’s “covert operations” were exposed.

Insider allegedly made $1.4M from inside trading

According to a January report cited by FatMan Terra, there were 16 possible instances of insider trading on Binance where the trader made a cumulative profit of $1.4 million.

In one of the cases, the insider bought Frax Share’s FXS on Uniswap over six days in small batches after funding a wallet “0xd23” with $53,000. The trader would later sell all their holdings at a profit after Binance listed the FXS token three days after their last purchase.

In another case, the trader bought 131 Ethereum worth of Virtua (TVK) two days before it was listed on Binance. The trader made 277 ETH from the token sales after its value rose.

The report cited similar trades where the trader made handsome profits from different altcoin listings.

While the trader’s identity remains unknown, their trade pattern suggests they have inside information about these Binance listings.

Binance response

CZ acknowledged FatMan Terra’s tweet, adding that the exchange had frozen the funds before his Twitter thread. CZ added:

“We are also always fighting potential leaks, etc. We welcome you to point them out in the future too. Helps all of us.”

FatMan Terra also pointed out that:

“Insider trading causes many profitable trades to become unprofitable (for example, an originally break even trade may result in a 10% loss due to exploitative insider activities), and the trader will never find out what happened to them.”

Meanwhile, Binance’s Chief Strategy Officer Patrick Hillman previously said the exchange has “an internal security team that monitors multiple platforms for possible employee trading activity, and it is a zero-tolerance policy.”