The whole story of the Binance employee rat warehouse incident: how much is the improper profit? How to solve the case?
By ChandlerZ, Foresight News
On March 24, Binance's official announcement stated that its internal audit team received a report on March 23, 2025, alleging that an employee used inside information to conduct front-running trading to obtain improper gains. Binance launched a full internal investigation.
At the time of the alleged incident, this person was working within the Binance Wallet team, which did not have any business relationship or collaboration with the project in question. However, it is alleged that he misused his previous job information, and the employee worked in a business development role at BNB Chain before joining the wallet team a month ago. Thus using the information he gained in his previous position and familiarity with the on-chain project, he knew that the project was at TGE, and purchased a large number of project tokens using multiple linked wallet addresses before the project publicly released the token announcement.
Following the announcement, the employee quickly sold some of his token holdings for a good profit, while the remaining tokens retained a significant amount of unrealized gains. Based on non-public information obtained from his previous position, this behavior constitutes a front-running transaction and is a clear violation of company policy.
At present, the preliminary investigation has been concluded, and those involved have been suspended from their duties and will face legal accountability. In addition, Binance has completed the verification and deduplication of the whistleblower and distributed the $100,000 reward equally among the whistleblowers.
On-chain evidence catches the "rat's tail"
According to the exposure of X user @土澳大lion brother BroLeon, Binance employee Freddie Ng was accused of illegal insider trading and participated in UUU token trading arbitrage of $110,000. After he made the on-chain information public, he asked Binance to give a reasonable explanation for the matter.
BroLeon said, "The UUU token rat warehouse has been hammered! I just verified this report, and the whole process of stealing chickens was picked up on the chain, and I don't know what will happen to the Binance wallet BD and growth employee Freddie Ng who were caught in the rat warehouse this time."
According to the entire process of combing, the Binance employee named Freddie Ng must have known in advance that the UUU token was going to be pulled, and used his small account 0xEDb0 to buy 24.1 million BNB at an average price of $0.00026 for 10 BNB, worth $312,000, and transferred all of them to the wallet starting with 0x44a.
Subsequently, Freddie sold 6.02 million UUUs at an average price of $0.0188 through the Bitget wallet for $113,600, and bulk the remaining UUU tokens to 8 different addresses, ranging from tens of thousands of dollars each.
"The secret thing about this guy is that the wallet he bought the rat warehouse in was transferred 121 days ago with his real-name wallet, freddieng.bnb (starting with 0x77C)."
On March 23rd, the BNB Chain trading platform uDex officially listed the official token UUU on four.meme. uDEX is one of the members of the eighth season of BNBChain MVB, which provides users with on-chain information and allows users to transact directly from social networks. Currently, the token has a market cap of $8.22 million.
The stubborn disease of the industry is difficult to treat
Insider trading is not a problem unique to the cryptocurrency market. Using historical data from the U.S. Securities and Exchange Commission (SEC), insider trading-related enforcement cases account for an average of 8-9% of total annual enforcement, a proportion that already exists in traditional financial markets.
This isn't the first time Binance has faced insider trading suspicions, but few employees have been investigated before. Since 2018, there has been a persistent systemic skepticism in the cryptocurrency industry about trading platforms within trading. A number of exchanges have been accused of similar rat warehouse problems at different times, which has become a stubborn problem in the industry.
The transparency and decentralization of the cryptocurrency market have not completely eliminated the risk of insider trading, but due to the lack of unified regulation and imperfect internal controls, trading platforms are prone to become a hotbed for such behavior. Although major exchanges have strengthened their compliance and risk control systems, the anonymity, technical complexity, and global operation model of cryptocurrencies still make traditional regulatory measures still face challenges in enforcement.
Industry giants such as Binance often show a strong deterrent effect when confronted with insider trading abuse, but also often due to the lack of effective prevention and monitoring measures, which leads to similar incidents. Externally, Binance's swift investigation results and actions show its determination to rectify the problem, but whether it can completely eliminate the rat trap problem still requires strengthening compliance management and transparency from the source within the industry.