After the collapse of FTX, Binance found itself in the crossfire of critics for a while. Harsh criticism ensued over a nontransparent proof of reserves issued by Mazars auditing firm, which stopped working with the world’s biggest crypto exchange soon after that.
The accusations against Binance
After Genesis and DCG entered the spotlight, most recently with the bankruptcy filing, Binance has been enjoying a welcome retreat. Criticism dwindled and things became quieter – until today. Head of Product Business Operations at Coinbase Conor Grogan made some serious accusations against Binance.
Pattern of front-running
Grogan tweeted that there has been a pattern of Binance front-running over the past year and a half. Examples include the purchase of around 78,000 ERNs between June 17th and 21st last year. They were sold right after the listing announcement. Wallets linked to Binance bought $900.000 RARI seconds before the token was listed and dumped them a few minutes after that.
Profit was $100k in a day
Grogan shared that hundreds of thousands of TORN were bought right before the announcement and dumped right after. The same happened with the token RAMP. An amount worth more than $500,000 was bought over a few days. As soon as the token was listed, it was sent to Binance.
Grogan claims that if they sold it, they made $100,000 in practically one day. He added that he found out about these transactions by looking at the original wallet’s deposit address with OKX and then checking the counterparty wallets.
Insider trading
According to Grogan, there could be several reasons for the front-running. The most likely cause according to the Coinbase exec is insider MNPI (Material Nonpublic Information). An insider connected to the listing team is passing on information about the details of new asset announcements.
It’s also possible that a trader found a leak in a test exchange or an API. In any case, law enforcement agencies and regulators will soon show interest. Coinbase also faced allegations of insider trading recently.
Binance entity behind Bitcoin jump?
Last week, rumors surfaced that an entity at Binance brought about the entire Bitcoin move from $17,000 to $21,000. First, an anonymous trader pointed out that a whale bought up Bitcoin with the stablecoin BUSD based on his observations of the BTC Spot CVDs (Cumulative Volume Delta). Other exchanges began to buy Bitcoin with Tether and USD at around $19,500.
