Source: Pexels – Olia Danilevich
- Coinbase listed GMT, the native tokens for STEPN, leading to a price breakout before a consequent dump, which has brought back claims of insider trading at the exchange.
- CEO Brian Armstrong revealed in a blog post that as a result, the exchange would revise its listing protocols to eliminate information asymmetries.
Coinbase has long been touted as a kingmaker in the world of crypto, particularly in regard to smaller altcoins. Once it lists a token, this token almost always shoots up, sometimes in just a few hours. However, as in its latest case, this phenomenon has concerned many who believe that there’s insider trading at Coinbase where people with knowledge of the listing process acquire massive amounts of tokens to be listed and dump them once they list. The exchange has responded by revising its review and listing protocols to curb this.
The latest token to list on Coinbase is the Green Metaverse Token (GMT), the native token of STEPN, a move-to-earn lifestyle app.
Coinbase will add support for GMT and GST. GST will be listed with the Experimental label. Learn more about the experimental label here: https://t.co/MBMBbYyZ7S pic.twitter.com/oJUYMSFDVO
— Coinbase Assets (@CoinbaseAssets) April 27, 2022
GMT rallied nearly 20 percent following the news to hit a new all-time high above $4.50. It tumbled after the hype had died down to go back to its pre-announcement levels.
While this is nothing new, with Coinbase–listed tokens taking off after the listing announcement, it sparked long-held criticism of possible insider trading at America’s largest exchange. Some even found evidence of some whale accounts that had snapped up millions of tokens that were listed on the exchange 24 hours before the actual listing.
Jordan Fish, a crypto influencer who goes by the name Cobie on Twitter pointed out the anomaly:
Found an ETH address that bought hundreds of thousands of dollars of tokens exclusively featured in the Coinbase Asset Listing post about 24 hours before it was published, rofl pic.twitter.com/5QlVTjl0Jp
— Cobie (@cobie) April 12, 2022
Other Twitter users cropped up with their own pieces of evidence that something fishy was going on at Coinbase.
Someone made a fresh wallet and front ran 7 figures into $UPI and $AVT before the @Coinbase announcement of listings.
Makes sense now.
Clear insider trading going on behind the Coinbase doors.$UPI Txns: https://t.co/qP9cyB9UATActual Wallet: https://t.co/bi2AulZg7d
— Crypto Max (@ScruFFuR) February 8, 2022
Coinbase pledges to change
The accusations seem to have gotten to the exchange’s management. Not long after ‘Crypto Twitter’ descended on Coinbase with the accusations of insider trading, the exchange’s CEO Brian Armstrong published a blog post in which he pledged to change the listing and review protocols.
An update on our asset listing processes.
We review assets as thoroughly and quickly as possible, listing everything we can safely and legally list.
There’s always more we can do to improve our asset listing process. Read more here: https://t.co/pEAeHk9JGr
👇🧵…
— Coinbase (@coinbase) April 28, 2022
Armstrong acknowledged the accusations of insider trading and said that the exchange is putting in measures to ensure this doesn’t recur. For one, any Coinbase employee found to be involved in any shady trading activity, whether by front-running the market himself or by providing information to others, will be fired immediately and reported to authorities.
However, Armstrong believes that the activity is usually not from an insider. Rather, he says that very keen traders watch out for integrations in the Coinbase API with any token as the exchange readies itself to list any token and then immediately buys that token.
While this is public data, it isn’t data that all customers can easily access, so we strive to remove these information asymmetries.
Going forward, the exchange will share publicly the tokens whose integration it’s testing before the process begins, it said. Further, it will provide asset ratings and reviews to help users navigate its platform, Armstrong said.
Related: Coinbase CEO Brian Armstrong thinks Apple is holding back innovation with the future in crypto-enabled devices
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