Binance has initiated an internal investigation in response to mounting concerns and community discussions regarding potential insider trading associated with Book of Meme (BOME), a meme coin built on the Solana blockchain.
On Monday, Binance issued an official statement on the X platform, announcing the commencement of an internal inquiry into the matter.
“Recently, we have noticed discussions in the community about the so-called Binance “BOME rat warehouse” incident,” the exchange wrote.
“We take this information very seriously and immediately launched an internal investigation based on relevant leads.”
The primary objective is to determine whether any Binance personnel were involved in the alleged misconduct.
Preliminary Findings Reveal No Insider Trading
The exchange said that the preliminary findings of Binance’s internal investigation have revealed no connection between the individual in question and the exchange.
Binance also urged individuals with information about any wrongdoing, including insider trading or corruption related to currency listings, to come forward.
The exchange even pledged rewards ranging from $100,000 to $5 million for verified reports, ensuring the anonymity of whistleblowers.
“If you have any reports involving currency listing and other corruption, or if we verify that Binance team members are corrupt, we will provide you with a reward of US$100,000 to US$5 million while keeping your identity confidential.”
Upon receiving information about the large BOME transaction, we immediately initiated an internal investigation, and the results showed that the user is not a member of Binance staff.
Transparency is a top priority at Binance, and our investigations team will continue to look…
— Binance Customer Support (@BinanceHelpDesk) March 18, 2024
These developments follow Binance’s recent announcement of plans to list BOME on its platform, offering spot trading pairs such as BOME/BTC, BOME/USDT, BOME/FDUSD, and BOME/TRY, effective from March 16 at 12:30 UTC.
On Friday, on-chain data firm Lookonchain wrote on X that a wallet withdrew 12,721 SOL worth around $2.3 million from Binance and bought 314 million BOME at $0.0074 before its listing, citing data from Solscan.
Following the listing announcement, the value of BOME experienced a significant surge, reaching $0.02703, a 345% increase, and its trading volume rose by 262% to $3.8 billion.
Insider Trading in Crypto
Last year, a former Coinbase product manager was sentenced to two years in prison in a one-of-a-kind insider trading case.
Ishan Wahi, 32, of Seattle, Washington, was sentenced by U.S. District Judge Loretta A. Preska for providing Coinbase’s confidential information about upcoming crypto listings to his brother and his friend to then make profitable trades.
Wahi started working on Coinbase’s asset listings team around October 2020, which gave him access to information about which digital assets are planned to be listed on the platform.
Wahi then leaked this information to help his brother Nikhil Wahi and friend Sammer Ramani buy tokens just before they were listed on the platform, collectively generating “realized and unrealized gains totaling at least approximately $1.5 million,” the DOJ said.
In another major insider trading case in crypto, Nathaniel Chastain, former Head of Product at OpenSea, was arrested and charged with wire fraud and money laundering in connection with insider trading in NFTs.
Chastain was responsible for selecting NFTs that would be featured on OpenSea’s homepage as part of his employment. Typically, the price of an NFT would drastically increase after it is featured on the homepage.
Being aware of this, according to the Justice Department, Chastain allegedly bought such NFTs and then dumped them shortly after they had been featured on the homepage — for a substantial profit.
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