According to a report in the Wall Street Journal, analysis by Argus, a firm that helps companies manage employee trading, shows that many crypto investors benefit from internal information about when exchanges lose tokens. Will give
Based on available public data, the report shows that many wallets show a pattern of buying and selling tokens a few days before listing and immediately after.
This practice is prevalent on most major exchanges, including Binance, Coinbase, and FTX. The major exchanges that list the token are usually a temporary catalyst for its prices.
According to data from Blockchain, within six days in August a wallet deposited $360,000 worth of Gnosis coins. Binance announced that it will be listing Gnosis on the seventh day, causing the price to increase by more than 7x its average over the past seven days.
Binance started selling the wallet 4 minutes after the listing was announced and finished everything within 24 hours. He made $500,000 from sales, making a profit of about $140,000. The analysis shows that this is not the first time Wallet has done the same.
Argus found that 46 wallets purchased $17.3 million worth of cryptocurrency just before they were listed on three major exchanges. However, the identity of the owners remains unknown.
Although the direct profit from the token sale exceeded $1.7 million, the actual profit is likely to be higher. As the firm pointed out, many wallets transfer a portion of their holdings to exchanges instead of selling them directly.
The analysis focused on the period between February 2021 and April 2022. It only considered wallets that showed a pattern of buying tokens prior to listing.
This analysis brings to the fore the topic of insider trading in crypto. Regulators and observers have consistently spoken out about how this practice hurts retail investors. But so far not enough action has been taken.
Binance, FTX issue statement
However, the exchanges listed in the analysis have denied the claim. He said his compliance policies prevent employees from doing business based on privileged information.
FTX and Binance also said that they reviewed the analysis, and it did not violate their policies.
A Binance spokesperson reportedly said
Including internal systems, a long-standing process that our security team investigates and holds accountable to those who engage in this type of behavior, immediate termination is minimal impact.
This view was also reiterated by FTX CEO Sam Bankman-Fried, who revealed that his firm explicitly prohibits its employees from trading tokens from being listed.
Binance CEO Changpeng Zhao also confirmed this on Twitter, saying that the firm has a “zero-tolerance policy and (we) hold ourselves to the highest standards.”
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