Binance Freezes Over $2 Million From Addresses Linked to Alleged Insiders, Here’s Why

Binance, the world’s largest crypto exchange by trading volume, has been recently under fire from all ends. After the US Commodities Futures and Trading Commission (CFTC) slapped a lawsuit on Binance earlier this week, another report emerged on allegedly insider trading practices that leverage the information with token listings and make money.

Citing on-chain data, Twitter handle FatMan has pointed out how an anonymous individual was frontrunning Binance listing pumps of multiple altcoins, and booking massive 7-figure profits.

🧵 On-chain data reveals the covert operations of a Binance listings insider. Over the course of several months, this anonymous individual front-ran the infamous Binance listing pumps of multiple altcoins, booking a 7-figure profit. And he left a trail for us to follow… (1/9)

— FatMan (@FatManTerra) March 28, 2023

FatMan provides complete details into how the 0x23d wallet address started buying the FXS tokens just 6 days ahead of the Binance listing on Uniswap. With Binance listing the FXS, the crypto price shot up, and the insider moved their FXS tokens to the exchange and booked healthy profits.

FatMan points to another incidence of insider trading with Terra Virtua (TVK) tokens. He notes that although Binance’s relationship with the insider is unknown, “it is clear that this individual had foreknowledge of Binance listings several days in advance”.

Binance chief Changpen Zhao responded to this development stating: “Thank you for pointing this out. We had frozen $2m associated with the address in question before your thread (and they never asked to re-claim). We are also always fighting potential leaks, etc. We welcome you to point them out in the future too. Helps all of us.”.

Binance Sees $2 Billion In Outflows

As regulatory troubles continue to mount for the largest crypto exchange, the exchange experienced net outflows of more than $2.1 billion on the Ethereum blockchain over the last week. However, the Nansen data shows that the exchange still holds more than $63 billion in the exchange’s publicly disclosed wallets. Speaking to WSJ on Monday, Andrew Thurman, an analyst at Nansen said:

“The pace of withdrawals is heightened compared to normal activity and did pick up after the CFTC announcement”.

However, Binance has handled even bigger outflows in the past. Last month, in February, as Binance announced the delisting of BUSD stablecoin, the outflows surged to more than $1 billion almost every day for a few days.

A spokeswoman for the exchange told WSJ that the exchange always has “more than enough funds to fulfill withdrawal requests.”