Insider Trading on Binance: A Profitable But Illegal Practice
Recently, a crypto trader engaged in front-running on Binance and made a $100,000 profit by purchasing and selling the Gains (GNS) token just before it was listed on the exchange.
The trader purchased GNS tokens worth $208,335 just 30 minutes before its listing on Binance, and after the listing, the token’s value increased by 51%, from $7.92 to $12.01. The trader then sold their tokens for a profit of $106,747 in less than an hour.
A smart money bought 26,881 $GNS at a cost of $208,335 before #Binance announcement of listing $GNS.
Then sold 26,881$GNS and got $315,082.
This guy made $106,747 in a few hours!https://t.co/B5gTvWwAN5 pic.twitter.com/f7G0yyIMPm
— Lookonchain (@lookonchain) February 17, 2023
Front-running, a practice that gives a trader or an exchange employee an unfair advantage in the market by using confidential information about a customer’s trade to place their trade before the customer’s transaction is executed, is a violation of trust and is considered illegal in most countries.
In a recent case, former Coinbase product manager Ishan Wahi pleaded guilty to participating in an insider trading scheme that generated $1.1 million in profits, making it the first insider trading case involving cryptocurrencies.
A recent academic research report found that 10-20% of new crypto listings on Coinbase were subject to front-running.
The CEO of Binance, Changpeng Zhao (CZ), has condemned insider trading and front-running, stating that they should be criminal offenses in any country, whether they involve cryptocurrencies or not.
READ MORE: Crypto Analyst Predicts Final Leg of Bitcoin’s Current Uptrend
Binance enforces a policy of self-regulation to prohibit employees from engaging in short-term trading. Anyone who tries to front-run on news that they will get listed on Binance will be put on a blacklist.
In conclusion, while front-running can result in significant profits, it is an illegal and unethical practice that can harm the integrity and fairness of the markets.
Crypto exchanges, including Binance and Coinbase, must continue to enforce strict regulations and punishments to deter front-running and insider trading.
Alexander Stefanov
Reporter at CoinsPress
Alex is Editor-in-Chief of Coinspress and co-founder of Millennial Media Group, with nearly a decade of experience covering financial markets - crypto first, then everything else. It started in 2016 with Bitcoin. Like most people at the time, he didn't fully understand it - so he kept digging. Blockchain, tokenomics, the projects, the cycles. That curiosity never stopped, and eventually pulled him into traditional markets too: equities, commodities, macro. Not because he left crypto behind, but because you can't properly understand one without the other. What drives him is straightforward: he wants to know why something is happening, not just that it's happening. Most market coverage stops at the headline - price up, price down, here's a chart. Alex finds that kind of reporting actively unhelpful. If you walk away from an article without understanding the mechanism behind the move, what did you actually learn? He holds a degree in Tourism from New Bulgarian University - not the most obvious path into financial markets, but markets have a way of pulling in people who are simply too curious to stay out. He has authored over 200 in-depth analyses and more than 10,000 articles across crypto and traditional finance. He still thinks every day in markets teaches him something new. That's probably why he hasn't stopped.
