Binance Implements Bounty Program to Combat Insider Trading
Binance co-founder, Yi He, recently addressed allegations of insider trading within the company by announcing a new bounty program. Under this program, employees who report dishonest colleagues will receive a $10,000 reward. Yi He made the announcement on Twitter, stating that any leaks about projects will result in a warning and termination. She also mentioned that if information is leaked after an announcement, the pending listing will be extended and decisions will be based on subsequent adjustments.
The Incident that Prompted the Policy Change
The policy change was prompted by “irregularities” surrounding the listing of Ronin on Binance’s exchange. Prior to the listing, the token’s price had surged but dropped by 20% immediately after trading began. It was speculated that individuals with prior knowledge of the listing had accumulated the token and sold it once the price increased.
Similarities with Coinbase’s Insider Trading Case
Binance’s situation resembles Coinbase’s experience when it was discovered that a wallet was front running tokens being considered for listing on the exchange. In Coinbase’s case, former product manager Ishan Wahi and his brother were involved in insider trading. They traded on confidential information about upcoming listings and made a profit of $1.1 million.
The Outcome of Coinbase’s Insider Trading Case
Ishan Wahi pleaded guilty to conspiracy to commit wire fraud and received a two-year prison sentence. The Wahi brothers also reached a settlement with the SEC that required them to disgorge their ill-gotten gains and pay interest.
Hot Take: Implementing Strong Measures Against Insider Trading
The implementation of Binance’s bounty program reflects their commitment to combating insider trading and ensuring fairness within their organization. By incentivizing employees to report dishonest behavior, Binance aims to maintain transparency and integrity in their operations. The similarities with Coinbase’s insider trading case highlight the prevalence of such issues in the crypto industry. It is crucial for exchanges to establish strict policies and consequences for insider trading to protect investors and maintain trust in the market.
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