Coinbase CEO Conor Grogan has suggested insider trading by unknowns on Binance using insider information about a future asset listing.
It appears that there is a pattern of Binance front-running over 18+ months
I found connected wallets that:
-Bought $900k Rari seconds before and dumped minutes after listing
-Bought ~78K ERN between June 17 and June 21 and sold right after listing announcement
-Did same w/ TORN https://t.co/yAolrfeHkO pic.twitter.com/VRq3vzfcgd— Conor (@jconorgrogan) January 23, 2023
The manager of the American exchange analyzed the activity of several related anonymous wallets over a period of over a year and a half. He found that they had the same pattern: before listing on Binance, accounts bought significant amounts of tokens and immediately dumped them after the start of trading.
Conor Grogan drew attention to a similar case with Rari Governance (RGT). An unknown person in May 2021 bought a coin worth $900,000 “seconds” before the listing and sold it “within minutes” after.
A similar operation followed in June of the same year, but with the purchase of Ethernity Chain ERN for ~$78,000 over several days with a sale after the start of trading. A similar reset after the listing was made by an unknown person with the mixer token Tornado Cash (TORN).
Grogan discovered this activity by examining the transactions of the counterparties of one of the involved wallets with a deposit on OKX. According to him, the anonymous user “not too” concealed the transactions, and he found only a part of them.
According to the manager of Coinbase, the unknown person earned approximately $100,000 according to the scheme he disclosed on Ramp (RAMP) and Gnosis (GNO) tokens, using about $500,000 each time for these front-running transactions. trade in the industry as early as 2021.
Here’s another related wallet. Purchases $500K+ of RAMP over a few day period, before sending it to Binance minutes after the listing announcement. Assuming they sold it was a ~100K payday
Binance can probably easily trace the person via deposit addresshttps://t.co/8CZjweMO9p pic.twitter.com/fcILtkuAZy
— Conor (@jconorgrogan) January 23, 2023
“It’s strange that a directly connected address continues to do this several months later,” Grogan said.
He offered two options for explaining the actions of the unknown:
- insider information from a Binance employee associated with the listing;
- random access to API or platform used for test trading before enabling asset support.
According to Grogan, regulators and law enforcement have recently been “hard on” insider trading on centralized exchanges. He pointed to the recent case of ex-Coinbase employee Ishan Wahi.
Recall that the brother of the former product manager of the American platform, Nikhil Vahi, who participated in the fraudulent trading scheme, pleaded guilty.
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