Token dump following Binance listing raises insider trading suspicions

Published at: Jan. 23, 2023

Insider trading has become a burning topic in the crypto ecosystem, especially in light of the recent conviction of an ex-Coinbase manager’s brother. The insider trading charges were believed to be the first involving cryptocurrency, and now another set of wallet addresses with transaction history linked to Binance listings has raised suspicion.

Conor Grogan, director of Coinbase, took to Twitter to flag the transaction activity of a few anonymous wallets over the past 18 months. The anonymous wallets allegedly bought multiple unlisted tokens minutes before their listing announcement on Binance and dumped them right after the announcement.

The first such instance came in the form of Rar tokens where one of these wallets bought $900,000 Rari seconds before and dumped it minutes after listing.

It appears that there is a pattern of Binance front-running over 18+ monthsI 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

Another wallet starting with 0x20 bought about 78,000 ERN between June 17 and 21 and sold right after the listing announcement. A similar token dump was observed with TORN token, where one of the mentioned wallets bought hundreds of thousands of these tokens and sold them right after their listing announcement.

A similar pattern was observed before the RAMP token listing on Binance, where one of these wallets starting with 0xaf bought $500,000 of RAMP over a few-day period, before sending it to Binance minutes after the listing announcement. The owner made a $100,000 profit on the trade.

Another $100,000 payday came from Binance’s GNO listing, where the owner of the wallet dumped the newly listed token on the market in the same fashion.

The token dump right after its listing on Binance has profited these wallets hundreds of thousands of dollars. The trade's accuracy indicates that the wallet owner has access to insider information on these listings.

Grogan speculated that this could likely be from a “rogue employee connected to the listings team who would have details on new asset announcements or a trader who found some sort of API or staging /test trade exchange leak.”

Binance recently revealed a 90-day token sale policy for employees, prohibiting them or their family members from selling any newly listed token in the mentioned time frame. Binance has not responded to Cointelegraph’s request for comment.