A Wall Street Journal article on insider trading in crypto platforms has caused quite a stir. Citing publicly available data, the article claimed that several anonymous crypto investors profited from inside knowledge of when tokens would be listed on exchanges.
It then takes back to August 2021 when one unknown crypto wallet had acquired a stake worth $360,000 of Gnosis coins, days before Binance revealed via a blog post that it would list Gnosis, to be traded among its users.
Shortly after the announcement, the wallet took advantage of the token’s rising price and began liquidating it entirely. As per an analysis performed by Argus Inc, the anon wallet netted a profit of about $140,000 and a return of roughly 40%.
The same wallet also exhibited similar patterns with at least three other tokens.
The report further said that the wallet was among 46 that purchased a combined $17.3 million worth of tokens that were listed shortly after on Coinbase, Binance, and FTX. However, the identity of the wallet’s owners remains unknown.
Crypto Exchanges’ Reaction To The WSJ Report
Spokespersons from both Binance and FTX said they are studying the analysis before confirming the trading activity in Argus’s report didn’t violate their policies. Coinbase maintained it has compliance policies in place which prohibit employees from trading on privileged information.
A Binance representative divulged that employees have a 90-day hold on any investments they make and that leaders in the company are mandated to report any trading activity on a quarterly basis.
“There is a longstanding process in place, including internal systems, that our security team follows to investigate and hold those accountable that have engaged in this type of behavior, immediate termination being minimal repercussion,” she said.
The spokesperson also said none of the wallet addresses were linked to its employees
In an email sent to WSJ, FTX CEO Sam Bankman-Fried a.k.a SBF wrote that the firm has a zero tolerance policy toward employees from trading on or sharing information related to upcoming token listings.
“The trading highlighted in Argus’s analysis didn’t result from any substantive violations of company policy,” SBF added.