Yi He, co-founder of Binance, is instituting a $10,000 reward system for employees who disclose information about colleagues engaged in insider trading or unauthorized leaks.
In a recent Twitter statement addressing allegations of potential insider trading issues within the company, Yi He outlined her resolution: a monetary incentive of $10,000 for employees who report any dishonest conduct among their peers.
In her Mandarin tweet on February 6, Yi He stated, “If there is any information leaked about a project for any reason, you will be warned once and then fired.” She continued, “If there is a leak, the listing will be canceled. If any information is leaked after the announcement, the pending listing will be extended directly, and the listing will be decided based on subsequent adjustments.“
The policy adjustments and the extensive Twitter thread were prompted by “irregularities” surrounding the listing of Ronin on Binance’s exchange. The token’s price surged before the announcement but dropped by 20% immediately after trading commenced. Speculation arose that individuals with advance knowledge of the listing had accumulated the token and profited by selling once the price surged.
Binance’s current situation mirrors Coinbase’s challenges when Crypto Twitter uncovered a wallet involved in front-running tokens considered for listing on the San Francisco-based exchange.
Ishan Wahi, a former Coinbase product manager, and his brother Nikhil Wahi were implicated in a scheme that involved trading based on confidential information about upcoming crypto asset listings on Coinbase. Between June 2021 and April 2022, Ishan Wahi shared information with his brother and a friend, Sameer Ramani, about the upcoming listings.
This inside information allowed them to purchase at least 25 crypto assets, with nine of them categorized as securities, generating a profit of approximately $1.1 million upon selling.
The Wahi brothers and their friend faced insider trading charges from both the Department of Justice and the U.S. Securities and Exchange Commission (SEC). A settlement with the SEC required the brothers to forfeit their gains and pay interest.
In the DOJ case, Ishan Wahi pleaded guilty to two counts of conspiracy to commit wire fraud, each carrying a maximum sentence of 20 years in prison. However, he was ultimately sentenced to serve two years in prison.
