An unidentified crypto trader made over $100,000 in profits after buying a token just minutes before it was listed on the dominant crypto exchange Binance, according to analysis by chain scout Lookonchain.
The trader bought $208,335 worth of Gains Network (GNS) tokens just 30 minutes before Binance listed the token on its global exchange. GNS rose 51% soon after the IPO – from $7.92 to $12.01. The trader then unloaded his GNS position and scoops up 106,747 dollars in profit in less than an hour.
Lookonchain referred to the exceptionally timed trade, perhaps cheekily, as “smart money”. If recent trends are any indication, smarts can have nothing to do with it.
Over the past year, several leading crypto exchanges have come under scrutiny for alleged – and in some cases confirmed – cases of front-running: the practice of traders, armed with inside information, backing up large positions of tokens that are anything but certain to become increased in value, and in this case, by a coveted listing on a centralized crypto exchange.
Earlier this month, Ishan Wahi, a former Coinbase product manager, pleaded guilty to participate in an insider trading scheme that netted him $1.1 million in profits. The case was described by federal prosecutors as the first insider trading case involving cryptocurrencies.
When the charges against Wahi were first announced in July, Binance CEO Changpeng Zhao condemned the Coinbase employee’s actions.
“Crypto or not, regulated or not, insider trading and front-running should be criminal offenses in all countries,” Zhao said.
But Binance itself may not be immune to such practices.
Late last month, Conor Grogan, Coinbase’s Chief Product Officer, alleged many cases for the past year and a half, associated wallets have consistently acquired tokens moments before they were listed on Binance, making millions of dollars in profits in the process. Identified in these claims, and a related history of The Wall Street Journalwas the same wallet address that profited from today’s GNS entry.
In other words, whoever made today’s questionably timed trade did so with their wallet already in the public eye, indicating the reality of how difficult it can be to stop such exploits, if indeed they are based on insider knowledge.
Binance claims that it institutes a self-governing policy to prevent employees from acting for short periods. But Coinbase’s Wahi, for example, passed on inside information about soon-to-be-listed tokens to his brother and friend — a practice not technically barred by Binance’s internal policies.
Binance did not respond Decryptits request for comment on the matter.
Unlike Coinbase, which is headquartered in the US, many crypto exchanges including Binance conduct the majority of their global operations outside the jurisdiction of US regulators.
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