Coinbase CEO Conor Grogan addressed the crypto community on Twitter, drawing attention to the suspicious transaction activity of several anonymous wallets. The owners of these wallets regularly bought unlisted tokens minutes before the listing was announced on Binance, and then sold off immediately after the announcement.
Conor Grogan suggested that someone from Binance employees or a trader who illegally accessed information about new announcements through the listing team or data from the exchange's test site could be involved in the fraud.
If this is frontrunning, there could be a few reasons for it :
-insider MNPI, most likely from a rogue employee connected to the listings team who would have details on new asset announcements
-a trader who found some sort of API or staging /test trade exchange leak— Conor (@jconorgrogan) January 23, 2023
Coinbase executive gives examples of several cases he identified. First, one of the wallets bought $900,000 worth of Rari tokens seconds before the listing announcement, then dumped them minutes after the sale started.. The second wallet, starting with 0x20, accumulated about 78,000 ERN from June 17 to 21, 2022 and sold them immediately after the listing was announced. A similar reset was seen with the TORN token, where one of the mentioned wallets bought hundreds of thousands of tokens and sold immediately after the listing was announced.
“The dump of tokens immediately after their listing on Binance brought hundreds of thousands of dollars to wallet owners. The accuracy of the transaction indicates that the owner of the wallet has access to insider information about the listing,” said Conor Grogan.
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
In his observations, the head of a rival exchange relies on the reports of Chinese crypto journalist Colin Wu, who is present on Twitter under the pseudonym @Wu Blockchain and was the first to express concern about suspicious transactions of anonymous wallet owners.
Colin Wu gave an example where an anonymous wallet address (0x5f…47db) bought about 6200 RPL ten minutes before Binance posted the RPL listing announcement and then sold everything ten minutes after the announcement for a profit of over $55,400.
Last July, the U.S. Attorney for the Southern District of New York filed insider trading charges against three Coinbase Global managers.. In January, a federal court in Manhattan issued a guilty verdict, convicting one of the defendants to a ten-month prison term, as well as deportation from the United States upon its expiration.