BNB Chain sues former employee over $628,000 memecoin deal

BNB Chain will file legal proceedings against former employees

BNB Chain said on August 1 that legal action was being taken against a former employee. The employee is suspected of retaining unauthorized access to a subphrase after leaving the company and subsequently using the associated wallet address for a new memecoin project.

Incident Summary

BNB Chain pointed out that the former employee illegally retained access to the seed phrase after leaving the company. The four wallets are suspected to have purchased 79.67% of the total supply of ASTEROID tokens for approximately US$10,000, and subsequently sold most of the tokens. According to Lookonchain estimates, these sales involved 1,103 BNBs and generated approximately US$628,000 in profits for operators. BNB Chain said it is cooperating with relevant departments, but did not disclose information on the individuals involved, jurisdictions, specific agencies or courts.

Former employee uses tutorial wallet to create tokens

According to BNB Chain's statement, the wallet address was originally created for a video tutorial produced by the company that demonstrated how to generate tokens. The group said the former employee then used the retained seed phrase to generate a new private key. BNB Chain denies creating, authorizing, promoting or participating in the new token project. The statement read: "The wallet address was created by a former employee and was used to create video tutorials and was later used to generate tokens. The employee has resigned due to this incident. The employee retained unauthorized access to his associated seed phrase after leaving the company."

BNB Chain draws a line with ASTEROID

BNB Chain described the subsequent use of the wallet address as an independent activity and emphasized that the token has nothing to do with the ecology and has not been recognized by the ecology. The announcement did not provide complaint documents, case numbers, regulatory agency names, nor did it state where legal proceedings were planned to be filed. Zhao Changpeng (CZ) forwarded the statement, saying the former employee was "essentially a fraudster" and reminded users to "Stay Safe (SAFU)." It should be pointed out that this description is an accusation and not the result of a court decision. BNB Chain also did not disclose whether it sought asset recovery, damages or criminal charges.

Four wallets are suspected to control nearly 80% of supply.

The online analytics account Lookonchain linked the token issuance to a token named Asteroid Shiba (ASTEROID). The account alleges that four newly created wallets spent approximately US$10,000 to purchase 796.7 million tokens, accounting for 79.67% of the total supply of 1 billion tokens stated in the statement. Subsequently, the wallets sold 718.8 million ASTEROIDs in exchange for 1,103 BNB (worth approximately US$638,000), resulting in a profit of approximately US$628,000. Lookonchain posted the four addresses on BscScan for inspection. However, blockchain records only show wallet activity and do not show the identities of the legal entities controlling these addresses. Therefore, the allegations against former employees are still mainly based on BNB Chain's statements and Lookonchain's analysis.

A seed phrase can generate multiple private keys in a deterministic wallet. Removing a private key from the device does not invalidate the copied underlying seed phrase, which can still be used to re-derive the wallet key. The incident raised questions about what to do with tutorial wallets and recovery phrases when employees leave. BNB Chain has not disclosed when the employee left, how long the seed phrase could still be accessed, and when the company discovered the unauthorized access. In addition, BNB Chain did not say whether it was reviewing other tutorial wallets.

It has been previously reported that Binance suspended an employee after investigating a case of allegedly using information obtained during his previous tenure at BNB Chain to conduct pre-emptive token trading. BNB Chain's latest statement did not say whether the same person was involved in the two incidents. In addition, investigators have also used new wallet clusters and centralized position holding models to investigate suspected memecoin manipulation. Such patterns can establish associations between addresses, but exchange records or other off-chain evidence are often needed to confirm identities.

Next step: Legal action and wallet tracking

BNB Chain said it was cooperating with relevant authorities, but its statement did not mention the names of any agencies that had launched investigations. A formal complaint or enforcement notice will help clarify legal claims, competent courts and remedies requested. Prior to this, company statements and on-chain analysis remained the main public records. These wallets involved, as well as any target addresses from which 1,103 BNB was received, may provide investigators with tracking clues. Recovering assets will depend on whether the funds flow into identifiable exchange accounts or services capable of responding to legitimate requests. BNB Chain has not announced any freezing, recovery or repayment measures.

Since multiple assets use the name ASTEROID and BNB Chain has not announced the contract address, this article does not include relevant information on token price changes. Using market data from other tokens may lead to misinterpretation of this incident. The next key development will be company updates, regulatory notices or public court documents.