Evidence of Insider Trading at Coinbase

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3 years agoThu Feb 10 2022 08:43:54
Evidence-of-Insider-Trading-at-Coinbase
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  • Evidence of insider trading at Coinbase has emerged in the past week regarding UPI and AVT tokens
  • A mystery buyer bought up six figures worth of both tokens just days before selling into Coinbase listing announcements
  • The buyer made some $734,000 profit on Uniswap from what appears to be inside information

Evidence has emerged this week that suggests that more insider trading is going on at Coinbase. The exchange, which found itself at the center of a similar charge when it listed XLM in 2019, recently announced the listings of two coins, Pawtocol (UPI) and Aventus (AVT), and it seems that an individual associated with Coinbase used this information to profit hugely in the run up to the announcements.

Twitter User Finds Suspicious Activity

Suspicions of insider trading were raised by Twitter user Crypto Max who noticed that one recently created Ethereum wallet had bought up masses of UPI and AVT tokens ahead of their Coinbase listing announcements, dumping when the price pumped on the news:

On the surface this could seem like a speculator getting lucky, but further investigation bears out the idea that this individual clearly knew in advance that Aventus and Pawtocol were both set for a pump.

The wallet in question saw its first activity on January 29 when it received over $366,000 in USDT from the MEXC Global exchange, which the buyer used to continually purchase batches of AVT and UPI:

pawtocol

This mass buy continued for three days until February 2 when the buyer began selling off his AVT tokens, just 24 hours before Coinbase announced that it was listing AVT. Given AVT’s low profile, it is highly unlikely that the buyer bought in to this scale just days before the announcement on the off chance that good news was around the corner.

Given that the value of the AVT token didn’t rise much on the listing news however, it seems that the buyer didn’t make much profit, if any, from that particular trade. But he had another ace up his sleeve.

Pawtocol Trade Brings Insider More Joy

The buyer found much more success with his UPI trade, using all the money from the AVT trade to buy up millions of UPI tokens on Uniswap in advance of, yes, a Coinbase listing announcement, which came on Monday. UPI bounced 61% on the shock news, which the buyer sold into, allowing him to make a nice six figure profit in a short space of time. Nice work if you can get it.

With his profits locked in, the buyer yesterday sent USDT worth $1.1 million back to MEXC Global, suggesting a total profit of some $734,000, minus Uniswap fees:

pawtocol2

Signs Point Towards Insider Trading

It’s clear from this evidence that someone was able to obtain ahead of time the names of two coins that Coinbase was about to announce. If the buyer had been picking up either UPI or AVT it would be more likely that they were working for one of the two projects, but the fact that they picked up both tokens and sent them to a fresh wallet just days before they happened to be announced by Coinbase is a huge red flag that someone at the company is illegally using privileged information.

Coinbase denied that any such activity took place, with a spokesman telling us:

Coinbase restricts all employees from trading the tokens it is considering for listing to make sure no one at Coinbase is front running assets, even if they don’t work on our asset listings team.

However, it’s clear that the individual somehow got hold of this information and used it to their advantage. The same accusations were levelled at Coinbase when it listed XLM in 2019, and the exchange was famously implicated when Bitcoin Cash rocketed in price split in 2017; a Reddit user with a “mate at CB” correctly predicted that Coinbase would list Bitcoin Cash, which it did the following day.

In that instance Coinbase conducted an internal investigation and found itself not guilty.

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