Binance employee’s rat-holding incident is the whole story: How much profit is made inappropriate? How to solve the case?

Author: ChandlerZ, Foresight News

On March 24, according to an official Binance announcement, its internal audit team received a report on March 23, 2025, accusing an employee of using insider information to conduct front-running transactions to obtain improper profits. Binance launches a comprehensive internal investigation.

At the time of the alleged incident, the person was working within the Binance Wallet team, which had no business relationship or cooperation with the project involved. But he was suspected of abuse of previous job information for personal gain, and the employee held a business development position at BNB Chain before joining the wallet team a month ago. Thus, using the information I obtained in my previous position and familiarity with the on-chain project, knowing that the project is being TGE, and using multiple link wallet addresses to purchase a large number of project tokens before the project publicly released the token announcement.

After the announcement, the employee quickly sold part of his tokens and made a lot of profits, while the remaining tokens retained considerable unrealized income. Based on the non-public information obtained from his previous position, this behavior constitutes a preemptive transaction and is clearly in violation of the company's policies.

The preliminary investigation has been completed, and the person involved has been suspended and will face legal accountability. In addition, Binance has completed the reporting verification and deduplication work and distributed the $100,000 reward evenly to the whistleblower.

The evidence on the chain caught the "rat tail"

According to X user @大天天天 BroLeon, Binance employee Freddie Ng is accused of suspected illegal insider trading and participated in UUU token trading to make arbitrage of US$110,000. After he disclosed the information on the chain, he asked Binance to give a reasonable explanation for the matter.

BroLeon said, "The UUU token rat trading was confirmed! I just verified this report and the whole process of stealing chicken was exposed on the chain. I don't know what will be done with Binance Wallet BD and growth employee Freddie Ng, who was caught in the rat trading this time."

According to the entire crime process, Binance employee named Freddie Ng must have known in advance that the UUU tokens would be pulled in. He spent 10 BNBs to buy 24.1 million pieces at an average price of US$0.00026, worth US$312,000, and all of them were transferred to the wallet at 0x44a.

Subsequently, Freddie sold 6.02 million UUUs at an average price of $0.0188 through Bitget wallet, earning $113,600, and bulked the remaining UUU tokens to 8 different addresses, each ranging from tens of thousands of dollars.

BroLeon said, "What this guy has in secret is that the wallet he bought in the rat warehouse was the money he transferred in with his real-name wallet freddieng.bnb (starting at 0x77C) 121 days ago."

On March 23, BNB Chain trading platform uDex officially launched the official token UUU on four.meme. uDEX is one of the members of BNBChain MVB Season 8, which provides users with on-chain information and allows users to trade directly from social networks. Currently, the token market value is US$8.22 million.

Stubborn diseases in the industry are difficult to cure

Insider trading is not a problem unique to the cryptocurrency market. Taking the U.S. Securities and Exchange Commission (SEC) data as an example, insider trading-related law enforcement cases account for an average of 8-9% of the total annual law enforcement, which already exists in traditional financial markets.

This is not the first time that Binance has faced insider trading doubts, but few employees have been dealt with inquiry before. Since 2018, the cryptocurrency industry has continued to have systematic questions about internal transactions on trading platforms. Many exchanges have been accused of having similar rat-holding problems at different times, which has become a stubborn problem in the industry.

The transparency and decentralized nature of the cryptocurrency market have not completely eliminated the risks of insider trading. Instead, due to the lack of unified supervision and imperfect internal control, trading platforms are prone to become a breeding ground for such behaviors. Although major exchanges have strengthened the construction of compliance and risk control systems, the anonymity, technical complexity and global operation model of cryptocurrencies still face considerable challenges in implementation.

Industry giants such as Binance often show a strong deterrent effect when facing the abuse of internal transactions, but they often cause similar incidents to occur frequently due to the lack of effective prevention and monitoring measures. Externally, Binance's rapid investigation results and actions show its determination to rectify, but whether it can completely eliminate the problem of quack trading still needs to strengthen compliance management and transparency from the source within the industry.