A group of unknown investors made a significant profit using insider information about upcoming listings on the Binance, Coinbase and FTX cryptocurrency exchanges. This is reported by The Wall Street Journal with reference to data from the analytical company Argus.
Argus has discovered 46 digital wallets that purchased Gnosis tokens (GNO) totaling $17.3 million in August 2021. Immediately after listing on popular trading platforms, they sold assets, earning income.
"The profit from operations with tokens that are visible in the blockchain amounted to more than $ 1.7 million. However, their true income is most likely much higher, since part of the assets were transferred from wallets to exchanges, and not exchanged directly for stablecoins," Argus believes.
For example, one of the addresses invested $360,000 in GNO six days before the token listing on Binance. After placing the asset on the platform, the asset price rose rapidly — the investor liquidated the position, receiving about $ 140,000 in income.
The company noted that the addresses associated with insider trading showed signs of activity until April 2022.
The problem of insider trading in the cryptocurrency market is not being raised for the first time. In April 2022, opinion leader Cobie discovered an address that had invested "hundreds of thousands of dollars" in tokens listed on the Coinbase Asset Listing, 24 hours before its publication.
Shortly after, Coinbase CEO Brian Armstrong wrote:
"There is always a possibility that someone inside Coinbase, voluntarily or not, can leak information to third parties engaged in illegal activities. We do not tolerate this and monitor these practices, conducting investigations when necessary."
Last Thursday, Coinbase legal adviser Paul Grewal also admitted that sometimes unscrupulous traders manage to get hold of inside information about upcoming listings.
At the same time, he stressed that it is not always about people leaking information — sometimes insiders receive data directly from the blockchain.
"For example, sometimes before listing an asset, we have to test it in such a way that it is reflected in the blockchain. These signals are not obvious to most market participants, but they are available to everyone and can be detected if someone searches carefully enough," he wrote.
After the recent WSJ publication, the head of Binance, Changpeng Zhao, said that his company adheres to a "zero tolerance policy" regarding insider trading practices.
According to him, independent analysts have checked the wallets indicated by Argus — none of them is associated with anyone from the Binance team.
"That's why we try not to share listing information even with project teams. But sometimes this cannot be completely avoided when we need technical assistance in integrating wallets and so on," Zhao wrote.
Recall that in September 2021, Bloomberg reported on the plans of the US Futures Trading Commission to check Binance for insider trading and market manipulation.