A group of unknown investors have made significant profits using insider information about upcoming listings on Binance, Coinbase and FTX cryptocurrency exchanges. This was reported by The Wall Street Journal with reference to data from analytical company Argus.
Argus identified 46 digital wallets that purchased Gnosis (GNO) tokens for a total of $17.3 million in August 2021. They earned income by selling assets right after they were listed on popular trading platforms.
“The profit from transactions with tokens appearing on the blockchain has exceeded $1.7 million. But since some of the assets are transferred from wallets to exchanges and are not exchanged directly for stablecoins, their actual revenue is likely to be much higher,” they say.
For example, an address invested $360,000 in GNO six days before the token was listed on Binance. After being placed on the platform, the asset’s price skyrocketed – the investor liquidated the position and generated around $140,000 in revenue.
The company noted that insider trading addresses were showing signs of activity through April 2022.
It is not the first time that the issue of insider trading in the cryptocurrency market has come to the fore. In April 2022, influencer Cobie discovered an address that invested “hundreds of thousands of dollars” in tokens listed on the Coinbase Asset List, 24 hours prior to release.
I found an ETH address that bought hundreds of thousands of dollars worth of tokens privately in a Coinbase Asset Listing post about 24 hours before it went live, rofl pic.twitter.com/5QlVTjl0Jp
– cobie (@cobie) April 12, 2022
Shortly after, Coinbase CEO Brian Armstrong wrote:
“There is always the possibility that someone inside Coinbase may knowingly or unintentionally leak information to third parties engaged in illegal activities. We do not tolerate this and we follow these practices by making investigations when necessary.”
Last Thursday, Coinbase legal counsel Paul Grewal also acknowledged that sometimes unscrupulous traders manage to get insider information about upcoming listings.
At the same time, he stressed that it’s not always about people leaking information – sometimes insiders get data directly from the blockchain.
We recently launched a blog that aims to potentially stand out around our assets. We take these reports very seriously, so today I want to share an update on our asset listing process and how it helps prevent misuse of company information. 1/4 https://t.co/cZfZ1LxGR2
– paulgrewal.eth (@iampaulgrewal) 19 May 2022
“For example, sometimes before listing an asset, we need to test it for reflection on the blockchain. “These signals are not obvious to most market participants, but they can be used by anyone and discovered if researched carefully enough.”
Following a recent WSJ publication, Binance CEO Changpeng Zhao stated that his company has a “zero tolerance policy” on insider trading practices.
That’s why we try not to even tell project teams when they will be listed. But sometimes wallet integration, etc. completely unavoidable when we need technical assistance for
When you notice suspicious activity, please use the notification email above. 🙏
— CZ 🔶 Binance (@cz_binance) 21 May 2022
According to him, independent analysts have checked the wallets listed by Argus – none of which are associated with anyone from the Binance team.
“This is why we try not to share listing information, even with project teams. But sometimes when we need technical support to integrate wallets, this is completely unavoidable,” Zhao wrote.
Recall that in September 2021, Bloomberg announced the US Commodity Futures Trading Commission’s plans to control Binance for insider trading and market manipulation.
Source: Fork Log
I’m Sandra Torres, a passionate journalist and content creator. My specialty lies in covering the latest gadgets, trends and tech news for Div Bracket. With over 5 years of experience as a professional writer, I have built up an impressive portfolio of published works that showcase my expertise in this field.