Binance Sets $5M Insider Trading Bounty Linked to BOME Crash

Insider knowledge or sharp move? Freshly-arrived whale raises eyebrows with a hefty BOME buy before listing.

by Tadas Klimasevskis. Fact checked by: Ciaran Lawler, Editor: Stefan Trapp

Published: March 18, 2024 │ 6:30 PM GMT

Bounty hunter looking for BOME frog chacter and any leads. Whilst BOME is hiding in the fish tank. — *Created by Kornelija Poderskytė from DailyCoin*

Newly-discovered crypto whale acquires 314M BOME before Binance’s listing.
Book Of Meme soars 22426% since inception but drops 51% days into listing.
Binance’s on-chain sleuths offer a bounty ranging from $100K to $5M.

The cryptosphere witnessed a scandal after insider trading rumors surfaced about Book Of Meme (BOME), an emerging memecurrency with a $750 million market cap. Binance became one of the earliest centralized adopters of the BOME memecoin. On March 16, 2024, the crypto giant added support for BOME and Spot trading pairs for BOME/BTC, BOME/USDT, BOME/FDUSD and BOME/TRY.

Listed on the platform with an inspection tag called the Seed Tag, the Solana-based memecoin has been under a magnifying glass since day one. However, it fell into a scandal due to ‘Rat House’ allegations, which is a term used to describe insider trading. In response to this, Binance launched an internal investigation and urged crypto traders with relevant information to approach the team at audit@binance.com, according to Binance’s Chinese X account.

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

To speed up the investigative process, Binance has put up a bounty, ranging from $100K to $5 million, to collect the information relevant to fraudulent behavior. The scrupulous approach by Binance detectives returned no inside trading proof on the preliminary investigation, while the reward is given upon verification that a Binance staff member has exploited their status.

Here’s Why BOME Is Investigated for Insider Trading

Last Friday, hours before Binance’s listing announcement, a brand new cryptocurrency address was spotted to gain 12,721 SOL from a Binance withdrawal. Blockchain detective agency LookOnChain noticed that this fresh crypto wallet raised eyebrows due to purchasing 314M BOME tokens before BOME was listed on Binance.

A fresh wallet withdrew 12,721 $SOL($2.3M) from #Binance and bought 314M $BOME at $0.0074 in the past 30 mins.

Does He know something we don't?🤔https://t.co/cDrm9SOtOB pic.twitter.com/g6GbCbZb1L
— Lookonchain (@lookonchain) March 15, 2024

Acquiring 314 million tokens for $0.0074 apiece, this whale now holds $4,076,024.20 worth of BOME on his Solana crypto wallet. While BOME’s price has significantly crashed since its all-time high on the listing day at $0.02689, the 51% drop since then still puts the fresh whale in a substantial profit.

After Binance’s primary investigation, no links to the top crypto exchange staff were found, and users were prompted to share information about incidents on the platform. As BOME’s status on Binance is under inspection with a monitoring tag, confirmed allegations of insider trading could potentially delist the coin.

On the Flipside

Previously, insider trading in crypto has brought serious legal consequences, with crypto platforms usually taking a reputational hit.
As seen in Ishan Wahi’s case, the former Coinbase product manager shared confidential information about token listings with his friends and relatives.
Ending up with a two-year prison sentence, the former Coinbase product manager executed a similar insider trading scheme to OpenSea’s ex-homepage manager.

Why This Matters

Since blockchain has trackable traits, transparency is key to bolster retail crypto adoption, which is frequently stigmatized for alleged insider trading.