As the world’s largest cryptocurrency exchange, Binance (Binance) are often accused of rat-trading practices, which are often constructed by Binance employees using inside information and can result in hundreds of thousands of dollars in profits with just one success.

For example, if a new token is about to be listed on Binance, its employees will be the first to know the news and start to buy a large number of tokens. At this time, the price of the token may not have risen. When Binance reveals that it will announce the listing of the token, the price will rise significantly. At this time, you can make a profit by selling.

Binance issued an announcement today revealing that the exchange received a complaint on March 23, accusing an employee of using inside information to pre-empt transactions to obtain improper profits. A preliminary investigation revealed that an employee who just joined the Binance wallet team last month used information obtained while working in a business development role at BNBChain to pre-empt project token transactions.

This employee knew that Binance Wallet was planning a token generation event (TGE) and expected that the event would arouse great interest from the community, that is, predicting that the price might rise significantly, so he used multiple associated wallets to purchase a large number of tokens for the project before Binance announced the news, and then quickly sold the tokens to obtain objective profits when Binance announced the news.

Binance accused the employee of taking advantage of his position to obtain non-public information for preemptive trading, which violated Binance's policies. The employee has been suspended and is awaiting further disciplinary action. Binance is also preparing to cooperate with regulatory authorities in relevant jurisdictions to take action.

It is worth noting that this is not a problem actively discovered by Binance. Instead, there were a lot of rumors about the employee establishing a rat warehouse on X/Twitter before Binance conducted the investigation. The information circulated showed that the employee was named Freddie Ng. LinkedIn showed that he joined the Binance wallet team last month and served as the BNBChain operations manager.

Binance plans to use $100,000 to reward anonymous users who report the incident via email. Each reporting user can receive a reward of $25,000. Binance said the exchange appreciates the public’s efforts.