On-chain detective ZachXBT exposes another insider trading scandal. What are the implications?

Source: Galaxy; Compiled by: Jinse Finance

After days of speculation, on-chain detective ZachXBT released a highly anticipated insider trading investigation report on Thursday. The target company is Axiom, a trading platform and one of the most profitable companies in the cryptocurrency space, with revenues of approximately $390 million to date.

The most famous anonymous detective in the cryptocurrency space released information three days ago, hinting at an investigation, but without revealing the target, which sparked a frenzy of speculation on cryptocurrency Twitter and prediction markets. Traders placed bets, speculating on which company was the target, with potential targets including Pump.fun, Meteora, World Liberty Financial, Wintertermute, Hyperliquid, Upbit, Jupiter, and others.

A dedicated prediction market on Polymarket saw trading volume surge to over $39 million. Around 1 a.m. Thursday, New York time, the probability of Axiom being suspected spiked to approximately 40%, a result confirmed by ZachXBT's revelation, which had been anticipated by insiders. ZachXBT published a detailed post accusing Broox Bauer, a business development employee at the star startup Y Combinator (Winter 2025 cohort), of abusing user privacy data for profit. Traders love the Axiom platform because of its fast execution speed and ability to quickly grab orders. The platform also offers perpetual futures trading. According to ZachXBT, the core of the scheme lies in the fact that Axiom's internal customer support control panel has virtually no controls or monitoring, making it accessible to internal employees. These tools can link wallet addresses to user identities, connected wallets, registration data, and transaction history. A user might trade using 10 different wallets and believe themselves to be anonymous, but Axiom's tools can link these 10 wallets, revealing their holders. This makes this incident different from typical on-chain snooping on transparent blockchains like Solana. Broox allegedly used this wealth of data to compile a Google Sheet containing the wallet addresses of targeted key opinion leaders (KOLs) and used it to preemptively intervene before Memecoin's "shills" could promote the token in their Telegram groups. The most shocking evidence is a private phone recording in which Broox claims he can “track any user” and “find out everything related to that user.” In the recording, he describes a strategy of starting with 10 to 20 wallets “so it won’t look suspicious,” and then gradually scaling up. He also boasts about using the same permissions to help a friend quickly earn $200,000. If ZachXBT’s allegations are true, this is not the first time a cryptocurrency industry employee has been arrested for trading with insider information. The U.S. Attorney’s Office for the Southern District of New York (SDNY) has a poor track record in handling such cases. May 2023: Ishan Washi was sentenced for leaking information about new coin listings on Coinbase to an accomplice. August 2023: Nathanial Chastain was sentenced for insider trading because he knew which NFTs would be displayed on OpenSea's homepage. April 2024: Avraham Eseinberg was convicted of manipulating the Mango market. ZachXBT points out that Broox's offices are located in New York City and believes the Axiom case "is a great opportunity for the U.S. Attorney's Office for the Southern District of New York." This office is led by Jay Clayton, who served as chairman of the Securities and Exchange Commission during Trump's first term and is very familiar with the cryptocurrency market. Axiom responded that it was "shocked and disappointed," promising to revoke employees' access to these tools and to continue investigating those suspected of wrongdoing. Meanwhile, Broox has reportedly deleted his LinkedIn account. ZachXBT delayed the release of this news for several days, leading people to believe it would reveal a shocking secret, enough to cause a huge market shock. However, when it was discovered that the whistleblower was merely an Axiom employee trading the relatively small-cap Meme coin, the story felt somewhat anticlimactic. This wasn't because the allegations were minor, but because such misconduct is almost commonplace in the Meme coin ecosystem, and the market began to suspect that a company of systemic importance to the cryptocurrency market might be behind it all. For Zack Pokorny of Polymarket and Galaxy Research, this is another victory. He has written extensively on the value of informational signals in predicting the market. Hours before ZachXBT released its research findings, Axiom YES's stock price surged, suggesting that insiders with inside information were pricing in the future. Bubblemaps subsequently discovered a potential link between Broox's wallet and a top Polymarket trader's wallet, noting that the latter also purchased Axiom YES shares, a common insider tactic. However, it remains unclear whether the two wallets belong to the same person. Observers speculate that the Axiom team may be profiting from the market, calling it "insider trading using investigations into their own insider activities." It's worth noting that Polymarket currently estimates a 31% probability of Axiom issuing a token this year, but this figure is only for reference due to the market's relatively low trading volume. If a token issuance is planned, the reputational impact of this investigation will further complicate matters. More broadly, this story highlights systemic problems within the rapidly growing cryptocurrency trading platform landscape. Axiom developed a product with wallet tracking and analytics capabilities, then allowed employees unsupervised access to data containing vast amounts of user privacy information. The consequences were predictable. As platforms rapidly expand and generate huge revenues, internal controls often lag far behind.