- An anonymous Binance insider trader front-run several listings on altcoins and made profits of seven figures.
- The consequences of crypto insider trading rob early investors of gains with forced liquidations.
The crypto asset industry is on the cusp of mainstream adoption through global regulations. As a result, leading centralized exchanges like Coinbase Global and Binance have been preparing for a seamless transition through their legal and policy departments. Already, Binance and its Chief Executive Officer Changpeng Zhao (CZ) has been charged in the United States for offering ‘illegal’ crypto trading in the United States.
Notably, the U.S Commodity Futures Trading Commission (CFTC) filed a civil action in the U.S. District Court for the Northern District of Illinois against Binance and CZ for aiding crypto traders to violate securities laws.
Binance In Retaliation
As the leading centralized crypto exchange with over 530k Bitcoins in its balance sheet, Binance has attracted a lot of regulatory scrutinies. To most global regulators, the crypto listing is the core of the exchange’s business that requires close scrutiny to protect investors. Moreover, Binance has a launchpad that is actively listing potential crypto projects before proceeding to the main trading platform.
According to a recent report by Twitter user @FatManTerra, Binance listings have been significantly infiltrated through insider trading. Notably, insider trading could occur from either the exchanges side or the crypto projects side.
Reportedly, an anonymous Binance insider trader front-run several listings on altcoins and made profits amounting to seven figures. The crypto researcher noted.
Our story begins with the 0xd23 wallet – an address that is freshly funded with $53,000, and immediately starts buying FXS on Uniswap. The transactions are spaced out in smaller batches to avoid slippage and detection. The small buys continue for 6 days.
The most intriguing insider trading perhaps involved the TVK listing on Binance. According to on-chain data, the anonymous insider trader deposited 131 ETH before TVK listing and cashed out about 277 ETH after the listing.
His second wallet (0x51) has some prescient trades as well. Over the course of two days, our insider bought 131 ETH of TVK. 2 days later, TVK was listed on Binance, and he sold into the ensuing pump, cashing out 277 ETH without even needing to touch a centralized exchange. (4/9) pic.twitter.com/HTsw4yPcqV
— FatMan (@FatManTerra) March 28, 2023
Interestingly, insider trading in Binance through altcoins listings has seen over $1.4 million liquidated at the expense of retail traders. As a result, a token that would gain 20 percent ends up rallying half due to insider trading.
In response to the findings, CZ highlighted that the exchange has already frozen $2 million in crypto assets associated with the address in question. CZ concluded by requesting for public help to minimize insider trading.
Thank you for pointing this out. We had frozen $2m associated with the address in question before your thread (and they never asked to re-claim). We are also always fighting potential leaks, etc. We welcome you to point them out in the future too. Helps all of us.
— CZ 🔶 Binance (@cz_binance) March 29, 2023
Bigger Picture
Binance is fighting to retain its presence in the United States following the recent civil action by the CFTF. Nevertheless, the exchange has made tremendous progress toward regulatory approvals in different jurisdictions across the world. However, the exchange remains committed to assisting crypto customers in the United States access the industry safely.
As a result, Binance wrote an open letter to crypto friendly United States senators to explain their plight.
Thank you for pointing this out. We had frozen $2m associated with the address in question before your thread (and they never asked to re-claim). We are also always fighting potential leaks, etc. We welcome you to point them out in the future too. Helps all of us.
— CZ 🔶 Binance (@cz_binance) March 29, 2023
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