After allegations of insider trading by people potentially connected to Coinbase were made by some cryptocurrency sleuths, CEO Brian Armstrong said the crypto exchange would change some of its token listing practices.
In a blog post on Thursday, Armstrong did not confirm whether any Coinbase employees had been disciplined or referred for criminal charges in response to alleged receipt of insider information used to profit from certain token listings. According to the CEO, Coinbase planned to change its listing process in the coming quarters “to try to prevent on-chain data from giving signals to vigilant traders,” to allow users to rate and review assets, and to invest more in forensic tools.
“There is always the possibility that someone within Coinbase could knowingly or unknowingly leak information to outsiders who are involved in illegal activity,” the Coinbase CEO said. “We have zero tolerance for this and we monitor it, conducting investigations where appropriate with outside law firms. […] If these investigations find that any Coinbase employee in any way aided or abetted any nefarious activity, those employees are immediately terminated and referred to the relevant authorities (potentially for criminal prosecution).”
According to Armstrong, employees are limited to trading crypto on Coinbase platforms by his company’s policies to monitor transactions and “stay ahead of potential abuse.” However, Cointelegraph reported in April that some online sleuths alleged that certain investors had inside knowledge of which tokens Coinbase was considering listing in Q2 2022 based on blockchain purchase records before the exchange published that information.
I found an ETH address that bought hundreds of thousands of dollars worth of tokens appearing exclusively on the Coinbase Asset Listing post about 24 hours before it went live, rofl pic.twitter.com/5QlVTjl0Jp—Cobie (@cobie) April 12, 2022
Coinbase’s CEO said “some market participants” may have been able to leverage its listing process by using on-chain data to monitor proof-of-exchange asset integrations, as well as spot small differences in trading interface responses. platform application programming, or API. . He added that the exchange would not “catch everything” but instead would aim to work with other crypto firms and respond to feedback to adjust policies as needed.
“While this is public data, it is not data that is easily accessible to all customers, so we strive to eliminate these information asymmetries,” Armstrong said. “We review assets as quickly as possible and list everything we can, as long as we believe it’s safe and legal.”
Related: Coinbase Experts Dump Nearly $5 Billion In COIN Stock Shortly After Listing
A listing on Coinbase can often result in a price surge for a crypto project due to the size and popularity of the exchange. In May 2020, the price of OMG Network’s OmiseGo token surged 200% within 15 minutes of listing on Coinbase before crashing. Morpheus Labs (MITX), Kromatika (KROM), and Big Data Protocol (BDP), all tokens Coinbase named as being considered for listings, showed gains of 185%, 145%, and 204%, respectively, shortly after the exchange’s announcement on April 202.