There are a few things in the financial world that the government tries with all its might to prevent: oversized companies, scams and ‘insider trading’. But the latter is alive and kicking in the cryptocurrencies industry, according to blockchain analysts at Argus.

Bad behavior of whales

The data analysts examined public data for recurring patterns, writes The Wall Street Journal† This shows that whales buy cryptocurrencies on a large scale that are introduced on exchanges only days after the purchase. After the introduction, these tokens will be immediately dumped by these high net worth parties. A trading platform that announces that it will offer a certain crypto is often an important reason why the value of such a token can rise.

According to Argus, parties that participate in this include Binance, Coinbase and FTX. A prime example of this is a wallet address that purchased a $360,000 stack of Gnosis tokens in six days. During this period, the value increased more than seven times. After those six days was the launch of Gnosis on Binance. Four minutes after the listing the address started selling, and after 24 hours, according to Argus, everything was sold. That would have resulted in a total of USD 500,000 and USD 140,000 in profit.

It wouldn’t have been the first stroke of this Ethereum address either. The blockchain analysts found 46 wallets that dumped tokens on the three trading platforms mentioned as soon as possible. The total value was about 17.3 million dollars. It is not known who the wallet addresses belong to.

Gray area: on the brink?

It can mean a number of things. First of all, it could just be employees of the platforms who don’t get orders from above or who just don’t understand that their actions are illegal. It is also possible that it has to do with the governance of the platforms and that they are aware that it is not allowed. In that case they are in any case punishable.

It’s a gray area because for a trading platform it’s practical to have to sell tokens, there they are market maker for. It is less clear where the limit lies. You will have to offer tokens, and there must be a price for this. But buying tokens in a few days and selling everything right away is another story. So where is the limit?


Please enter your comment!
Please enter your name here