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Binance CEO CZ Confirms $2 Million Frozen After Anonymous Insider Accused of Insider Trading on Binance Listings

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An anonymous individual with insider access to Binance has been accused of using on-chain data to front-run the exchange's infamous listings pumps, according to a thread posted by Twitter user FatManTerra on March 28.

The individual allegedly booked a 7-figure profit over several months by buying altcoins before they were listed on Binance and then selling them as the price surged following the listing.

The insider allegedly made a net profit of approximately $1.4 million over 16 instances of potential insider trading, as outlined in a Medium post by @spssnft. The post details how the insider used the 0xd23 and 0x51 wallets to buy FXS and TVK, respectively, before each token was listed on Binance.

After Binance listed FXS and TVK, the insider allegedly sold their holdings and made a healthy profit at the expense of fair market traders who lacked asymmetrical information.

Binance CEO Changpeng Zhao, also known as CZ, replied to the thread and thanked FatManTerra for bringing the issue to their attention. CZ stated that Binance had frozen $2 million associated with the address in question before the thread was posted.

Full thread from FatManTerra:

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)

Our story begins with the 0xd23 wallet - an address that is freshly funded with $53,000, and immediately starts buying FXS on Uniswap. The transactions are spaced out in smaller batches to avoid slippage and detection. The small buys continue for 6 days. (2/9)

3 days after the insider's final FXS purchase, like magic, Binance lists FXS, resulting in a large price increase. The insider then sends all of his FXS to an exchange, booking a healthy profit at the expense of fair market traders that didn't have asymmetrical info. (3/9)

His second wallet (0x51) has some prescient trades as well. Over the course of two days, our insider bought 131 ETH of TVK. 2 days later, TVK was listed on Binance, and he sold into the ensuing pump, cashing out 277 ETH without even needing to touch a centralized exchange. (4/9)

The full research, conducted and submitted by @spssnft, outlines 16 instances of potential insider trading with a net profit of about $1.4m. This article has flown under the radar, and, IMO, must be publicized further for market awareness. https://medium.com/@OverlordsO/the-binance-insider-47f7890da47e… (5/9)

The consequences of insider trading to retail investors are invisible yet crucial. A coin that would otherwise have gone up 20% may only move up by 10%, and nobody ever finds out that someone is secretly stealing edge from the market using an unethical advantage. (6/9)

Conversely, 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. (7/9)

Binance's relationship to the insider is unknown, but it is clear that this individual had foreknowledge of Binance listings several days in advance. Also, this was one of the more unsophisticated (okay - dumber) criminals, as he didn't cover his tracks well at all. (8/9)

The positive side is that the blockchain is immortal, and these trades from years ago can never be wiped. I am optimistic that after these trades are made public, either Binance or law enforcement can take swift action against the offender. Here's to free & fair markets. 

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