Coinbase director Conor Grogan speculated about possible insider trading by unidentified actors on Binance, using confidential information about a forthcoming 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
An American exchange executive analyzed the activity of several related anonymous wallets over a period spanning more than a year and a half. He found a consistent pattern: before listings on Binance, the accounts bought substantial amounts of tokens and dumped them immediately after trading began.
Grogan pointed to a similar case with Rari Governance (RGT). An unidentified buyer bought $900,000 worth of the token seconds before listing and sold within minutes after listing.
A similar operation followed in June of the same year, this time involving the purchase of Ethernity Chain ERN for about $78,000 over several days, with a sale after the listing began. A comparable dump after listing was also carried out with the Tornado Cash token (TORN).
Grogan uncovered this activity after studying the counterparty transactions of one of the involved wallets with a deposit on OKX. He said the anonymous user “did not hide the operations very well,” and he found only a portion of them.
According to the Coinbase manager, the unidentified participant earned roughly $100,000 from the scheme on Ramp (RAMP) and Gnosis (GNO) tokens, using around $500,000 for each of these front-running trades. The wallet involved had appeared in a Wall Street Journal article about the industry’s insider-trading problem as far back 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 the directly linked address continues to do this for several months afterward,” Grogan noted.
He offered two possible explanations for the unknown actor’s actions:
- insider information from a Binance employee connected to the listing;
- random access to API or the platform used for test trades before the asset support goes live.
In Grogan’s view, regulators and law enforcement agencies have recently cracked down hard on insider trading on centralized exchanges. He pointed to a recent case involving former Coinbase employee Ishan Wahi.
Earlier, the brother of the former Coinbase product manager, Nikhil Wahi pleaded guilty.
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