Anti-corruption: It's Finally Web3 Giants' Turn

Written by: flowie, ChainCatcher

Web3 Giants Have Finally Started Their “Anti-Corruption” Campaign

This morning, Binance reported that an employee had used their former position for insider trading and made illegal profits. The individual involved has been suspended and may even face legal action. While rumors of internal corruption at Binance are not new, this marks the first time Binance has publicly disclosed details of insider trading as part of its anti-corruption efforts.

Following Binance’s lead in cracking down on insider trading, other exchanges like Huobi have also announced plans to follow suit. However, compared to Web2 giants, which have long institutionalized anti-corruption practices, Web3 companies are only just beginning their journey.

Publicly Disclosing Insider Trading – Is This the Start of a True Anti-Corruption Movement in Crypto?

According to Binance’s announcement, this anti-corruption action was triggered by a whistleblower report two days ago.

The accused employee was part of the Binance Wallet team and had previously worked in business development for BNB Chain. Using information obtained from their former role, they purchased tokens of a certain project before its official announcement and then quickly sold them post-announcement, making a substantial profit.

Binance’s response included:

Suspending the employee and potentially pursuing legal action.
Rewarding four whistleblowers with $100,000.
Providing an official reporting channel for the community.

However, before Binance received the official whistleblower report, several Twitter users had already exposed the insider trading.

@pycharts and @BroLeonAus shared on-chain evidence implicating Binance Wallet BD and growth team member Freddie Ng in insider trading involving $UUU.
@BroLeonAus outlined the scheme, claiming that Freddie Ng had prior knowledge of a pump in $UUU and used an alternate account to buy $31.2K worth of $UUU with 10 BNB at a low price. He then transferred the funds to a laundering wallet and sold at a high price via Bitget, making a first profit of 181.4 BNB (~$110,000).
He further distributed the remaining $UUU across eight different wallets, each containing thousands of dollars.
The scheme was uncovered because the wallet used for insider trading was linked to a real-name Binance account (freddieng.bn) registered 121 days prior.

Binance’s History of Anti-Corruption: From Public Pressure to Action

The misuse of insider information by Binance employees is not a new phenomenon. However, repeated community exposure and scrutiny have gradually pushed Binance to intensify its anti-corruption efforts.

February 2023: The listing of RON on Binance saw a sharp price drop, leading to speculation of insider trading. While Binance later dismissed it as a misunderstanding, it took the opportunity to publicly commit to combating corruption.
Binance later introduced three key anti-corruption measures:
- Strengthening management and firewalls within the token listing team.
- Canceling token listings if information is leaked.
- Offering bounties for whistleblowers to encourage community oversight.
Early 2024: A Medium user, Qwertyuiopasdfghj, published a whistleblower letter accusing Binance Labs (now rebranded as YZi Labs) of severe internal corruption, alleging that top executives colluded with invested projects for financial gain.
Binance did not publicly investigate or disclose findings regarding this case, but during the rebranding to YZi Labs, it stated that all Labs employees’ information is public, and anyone with evidence is welcome to report directly to Changpeng Zhao or He Yi.
He Yi also revealed that in the past two years, Binance conducted over 120 internal audits, dismissed more than 60 employees for violations, and recovered over $30 million in illicit gains.

Despite these efforts, Binance has historically never disclosed detailed corruption cases. This recent revelation of insider trading within the Binance Wallet team may signal a new level of transparency. As market profits shrink and regulatory pressure increases, openly addressing corruption could become one of the best ways for Binance and other major exchanges to regain community trust.

What Can Web3 Learn from Web2’s Decade-Long Anti-Corruption Practices?

Corruption is a widespread issue among large corporations. However, compared to Web3 companies, Web2 giants have been tackling corruption for over a decade and have largely normalized these efforts.

Common Anti-Corruption Strategies in Web2 Giants

Establishing dedicated anti-corruption investigation teams with internal reporting mechanisms, along with periodic public disclosures of anti-fraud reports.

JD.com has set up a $1.4 million anti-corruption reward fund to incentivize whistleblowers.
ByteDance regularly publishes anti-corruption reports, detailing the number of dismissed employees, types of violations, and key risk areas (such as procurement fraud, monetization of technical authority, embezzlement, and illicit trading of internal data).

Creating cross-industry “blacklists” to prevent corrupt employees from moving between companies.

Tencent, Baidu, Meituan, JD.com, and 800+ other companies have formed the “Sunshine Integrity Alliance,” sharing records of dishonest employees.

Leveraging big data and AI to monitor internal operations.

ByteDance has built a specialized risk-control database, where monitoring teams can retrieve data and the system automatically flags suspicious activities.

Regular compliance training to enhance employees' awareness of ethical and legal risks.

How Can Web3 Exchanges Accelerate Their Anti-Corruption Efforts?

Compared to Web2 companies, Web3 exchanges deal with financial transactions, which make corruption both more tempting and harder to detect.

For Web3 giants to institutionalize anti-corruption, they should focus on three key areas:

🔹 Strengthening internal oversight by involving independent audit firms and implementing transparent reporting mechanisms.

🔹 Using blockchain technology to track and publicly disclose suspicious internal trades, enabling community oversight.

🔹 Establishing cross-industry “Integrity Alliances” with other exchanges to share records of corrupt employees.

The Web3 anti-corruption movement has only just begun, and its success will determine the future credibility and sustainability of major exchanges.

This article is sourced from Foresight News:

https://foresightnews.pro/article/detail/80921

Respectfully submitted by the AIC Team

March31, 2025