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Analysts Hunch

Just a Hunch? Analysts Point to an Uptick in Crypto Insider Trading

Difficult to prove, yet often suspected, insider trading has been a staple practice of dishonest investors ever since the stock markets took off. Over time, regulators like the SEC were founded in order to fight the phenomenon – despite it being an elusive one hard to pin on a perpetrator.

This is due to the nature of insider trading, which can be set off by nothing more than a seemingly off-hand comment about a company or other between acquaintances behind closed doors.

Although regulatory bodies have been largely successful at curbing this issue in the world of traditional finance, it seems to persist within the world of crypto, where legal precedent is scarce, and established entities are even scarcer.

Three Platforms, One Investigation

A report made by financial advisors Argus Inc. and reviewed by the Wall Street Journal shared insight into transactions of tokens soon to be listed on FTX, Binance, and Coinbase prior to these platforms actually adding them. Several prime suspects for insider trading came to light by following wallets involved in this phenomenon.

46 wallets were identified as having purchased up to $17.3 million worth of crypto assets across various fledgling projects shortly before they were listed on one of the aforementioned exchanges. The profit garnered from these transactions amounts to at least $1.7 million.

However, this figure only accounts for tokens traded for stablecoins or fiat on the spot. The real number is probably much higher once paired with further savvy trades.

All in a Week’s Trade

The most glaring alleged culprit is a wallet that is recorded as having purchased $360k worth of Gnosis over six days – right before Binance announced the listing of the asset. The announcement caused a $110 increase in the token’s price within the hour.

The Gnosis holdings were promptly put up for sale, netting the mysterious “investor” a profit of $140k in the four hours it took to sell off the last.

Zero Tolerance for Fraud

Spokespeople for all three exchanges reiterated their platforms’ zero-tolerance policies for insider trading. Binance, for instance, allegedly prohibits employees from cashing out any investments made for 90 days.

“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.”

CZ also took to Twitter, assuring concerned parties that an investigation had been launched and urging followers to forward any concerns to Binance’s in-house auditing department.

Saw an article about insider trading. We have a zero-tolerance policy and hold ourselves to the highest standards. 3 investigators reviewed the wallets, none is associated with Binance employees.

If you see anything suspicious email


— CZ 🔶 Binance (@cz_binance) May 21, 2022

Although insider trading will likely persist within all investment sectors for the foreseeable future, regulatory watchdogs and compliance teams across all institutions will continue their efforts to hamper the dishonest practice.


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