Binance Sued By US Financial Watchdog, FatMan Unloads Insider Trading Activities

The world's largest crypto exchange is based on its daily trading volume, Binance. (Photo; Doc. Bitcoin Exchange)

JAKARTA - Binance is one of the most popular and influential crypto exchanges in the world. The exchange offers various services and products for crypto users, including spot trading, margins, futures, options, staking, loans, and others. The exchange is also known to often register new tokens that attract investors.

However, recently Binance received negative attention from various parties. First of all, the US CFTC sued Binance for alleged violations of crypto futures trading regulations. The CFTC claims that Binance has offered futures trading services without having a suitable license in the US.

In addition, other reports emerged about alleged insider trading practices involving token lists on Binance. A Twitter user named FatMan, on March 28, revealed how an anonymous individual has used information with a token list in Binance to generate a huge gain of up to 7 digits.

After the US Futures Commodity Trade and Trade Commission (CFTC) filed a lawsuit against Binance earlier this week, another report emerged about alleged insider trading practices that utilize information with tokens and money-making lists.

FatMan provided complete details on how the wallet address 0x23d started buying FXS tokens just 6 days before Binance's listing on Uniswap. With Binance registering FXS, crypto prices are soaring, and people are moving their FXS tokens to the exchange and posting healthy benefits.

FatMan pointed out another incident from insider trading with the Terra Virtua (TVK) token. He noted that although Binance's relationship with insiders was unknown, "it's clear that this person already knew the Binance token list a few days earlier".

Binance chief Changpeng Zhao responded to this development by stating: "Thank you for showing this. We have frozen 2 million US dollars related to the address in question before your thread (and they have never asked to claim back). We have also always been fighting potential leaks, etc. We welcome you to show this in the future. Help us all."

Insider trading is an illegal practice where a person uses classified or special information about a company or asset to gain profits or avoid losses in the market. Insider trading can damage market integrity and harm investors who do not know the information.

In the Binance case, an anonymous individual suspected of insider trading appears to have access or links to the Binance team responsible for selecting which tokens will be entered into the stock exchange. By knowing the previous token list, the individual can purchase the token on other platforms at low prices and then sell it on Binance at high prices after the official announcement.

This is not the first time Binance has faced accusations of carrying out such illegal activities. In 2019, Binance CEO Changpeng Zhao was accused of insider trading using his personal Twitter account to signal the list of certain tokens. Zhao denied the allegations and claimed that he only shared his opinion as a crypto fan.