Binance and Coinbase Accused of Insider Trade (Again)

News and Analysis

Binance and Coinbase, two large crypto exchanges, were accused of facilitating insider trade on Twitter by a researcher from The Block and the CEO of Canadian exchange BullBitcoin. Both exchanges recently listed small-time altcoins that saw a significant price increase days before the official announcement.

A 10 Day Pump Leading to Merger

On May 20, Binance announced a strategic merger between Travala and TravelbyBit. Travala is a blockchain-based accommodation booking platform, TravelbyBit is a cryptocurrency-friendly flight booking portal backed by Binance. Essentially, this move can be interpreted as Binance “acquiring” Travala.

Larry Cermark from The Block pointed out that Travala token’s price was surging for 10 days in a row prior to the announcement and lays this admittedly unlikely coincidence at Binance’s feet.

In his other tweet, he provides damning but somewhat inconclusive evidence of insider trade.

As Binance CEO Changpeng Zhao told Yahoo Finance in an interview, Binance implemented tough trade restrictions on its employees to discourage insider trading: “Everyone has to get preclearance if they want to trade any kind of cryptocurrency, and they have to wait for at least 30 days to make another trade.”

As of today Binance has not yet commented on this incident.

OmiseGo’s Inconspicuous Resurgence

In the meantime, another incident of a recent token pump was reported by BullBitcoin CEO. This time it was OmiseGo, the project forgotten by many. Allegedly, the was pumped by 40% two days prior to being listed on Coinbase.

OmiseGo was a big hit in 2017. Having such people as Vitalik Buterin on its advisory board it quickly joined the billion-dollar club. But in the next few years, progress was very slow and the coin slowly faded into obscurity. By 2019 the coin lost most of its value and was a major disappointment to investors.

That being said, the project is not quite dead. And while Francis Pouliot alleges that the carcass of the noble beast which was OmiseGo was unearthed by Coinbase only to make someone a quick buck, it is not out of the question that OmiseGo’s pump was instigated by an upcoming big announcement. Earlier this month OmiseGo underwent a rebranding and while no official speculations have surfaced yet, this may be another suspicious coincidence.

Sins of the Past

Coinbase has not commented on this incident as of yet. But this is not the first time Coinbase was accused of insider trade. Back in 2017, at the time of Bitcoin’s hard fork, Coinbase listed BCH but was forced to suspend operations after only 2 minutes of trading due to suspicious price dynamics. The coin began to surge rapidly hours before Coinbase made the announcement.

Later it was established that there was at least one employee at Coinbase who used insider information to his advantage.

Class action lawsuit was filed by the disgruntles community and the judge eventually ruled that the exchange showed negligence and “incompetence born of haste.” Yet the trial is still ongoing.

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