According to blockchain observer LookonChain, an unknown crypto trader made a profit of about $95,000 after he bought Gains Network (GNS) tokens worth $207,907 a few minutes before it got listed on the leading crypto exchange Binance. After the listing, GNS went from $7.91 to $12.02, representing a 49% increase.
LookonChain termed the remarkably timed trade smart money, but it might be far from that if recent trends show anything. Last year, many crypto exchanges were criticized for alleged cases of front-running (a practice where a trader receives insider information about a token, then buys huge amounts before it’s listed on the exchange).
At the start of this month, former Coinbase manager Ishan Wahi pleaded guilty to his involvement in an insider trading scheme which left him with a profit of $1.2 million. According to Federal prosecutors, this was the first insider trading case that involved cryptocurrencies.
Binance CEO Condemns Those Involved in Front-Running and Insider Trading
Changpeng Zhao, the Binance CEO, condemned the actions of the Coinbase employee when the authorities disclosed the charges last July. Zhao said that whether crypto is regulated or not, front-running and insider trading should be crimes punishable by law in any country.
Also read:However, Binance itself does not appear to be immune to these practices. In January, Coinbase’s head of product, Conor Grogan, took to Twitter to write that he had noted several instances of wallets buying tokens a few minutes before they were listed on Binance, and the involved traders ended up making profits worth millions of dollars.
Report Shows the GNS Trader Has Been Involved in Other Questionable Trades
Surprisingly, the wallet that made a profit from the GNS listing today is among those that Grogan had highlighted. So whoever executed this suspiciously timed trade did so, knowing their wallet was already under public scrutiny. In addition, it also shows that it might be a little difficult to end such exploits, especially if they are based on insider information.
Further, Binance has insisted that it employs a self-governing policy that prevents employees from conducting personal short-term crypto transactions and must hold their assets for over three months before trading.
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