Earlier in the week, Yi He, the co-founder of crypto exchange Binance, took to X to comment on the allegations about an insider trading problem at the company.
She came up with a solution of paying bounties worth $10,000 for employees who would report on dishonest co-workers.
The post
On February 6th, she published a post in Mandarin in which she said that if employees leak any information about a project, they would issue a warning first and then fire them.
She stated that they would cancel the listing and if there is a leak of information after the announcement, they would extend the pending listing directly.
She went on to say that subsequent adjustments would then be used to decide the listing. This long thread came after a particular incident and also prompted changes in policy.
There had been ‘irregularities’ just before and right after Ronin had been listed on the Binance crypto exchange.
In the run-up to the announcement, the token has seen a pump in its price, but there had been a 20% drop in its price immediately after trading started.
The theory had been that people who had been aware of the listing before its announcement had accumulated the token and once the price pumped, they had sold it off.
The situation
Binance is facing a situation that is not very different from the plight Coinbase had faced after a wallet had been identified by Crypto Twitter, which seemed to be front running tokens that the exchange was considering for listing.
Ishan Wahi, a former product manager at the San Francisco-based company, and his brother Nikhil Wahi had been involved in a similar scheme.
They were trading confidential information about upcoming listings of crypto tokens on the crypto exchange.
Ishan Wahi tipped off Sameer Ramani, his friend, and his brother, about the crypto tokens that were going to be listed between June 2021 and April 2022.
They had used this detail to purchase at least 25 crypto tokens, nine of which were classified as securities, and they had generated a profit of $1.1 million through their sale.
More details
The US Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) eventually charged the three individuals with insider trading.
A settlement was made between the SEC and the two brothers, which required them to give up their ill-gotten profits and also pay interest.
As for the case filed by the DOJ, Ishan Wahi had opted to plead guilty to two counts of conspiracy to commit wire fraud.
Even though the maximum sentence for each of the charges is 20 years in prison, he received a sentence of two years.