Insider trading happening at Coinbase

I know Halloween is still six months away, but I decided I was going to dress up as Sherlock Holmes for a day. Well, a rather modern twist on Sherlock, at least.

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It started with this post from Coinbase, which was, let’s say, rather curious. A bunch of coins were announced as being under consideration to be added to Coinbase.

“Starting immediately and as part of an effort to increase transparency by providing as much information symmetry as possible, Coinbase will be using this blog post as a pilot to communicate assets under consideration for listing in Q2 2022 (April 1st, 2022 to June 30th, 2022)”.

Coinbase announcement, April 11th

Then, murmours started on the Internet – Twitter, Reddit (where else?) – that there was shady business going on regarding insider trading. Conspiracy theories in crypto are nothing new of course, so at this point I wasn’t all that excited. That would soon change.

The Tokens

At the moment, the list is populated by 45 Ethereum tokens and 5 Solana tokens. Let’s take a look at a random sample on the list, and their corresponding market caps.

• Apricot Finance (Solana) – $1.8 million
• Indexed Finance (Ethereum) – $0.9 million
• RAC (Ethereum) – $2.0 million
• Big Data Protocol (Ethereum) – $1.4 million

I could go through the rest, but I think you get the point. These aren’t exactly popular cryptos getting listed, and their market caps are nearly non-existent. A lot don’t even have full data listed on CoinMarketCap. I’m not sure what kind of language I’m allowed use in these articles, but I believe there is a four-letter word beginning with S and ending in T that is used to describe these – s**tcoins.

Why are Coinbase listing these? I have absolutely no idea. They were traditionally the most premium exchange with the narrowest range of coins. Clearly, that has now gone out the window. Although looking at their share price, at an all-time low of $148 after hitting $430 on their IPO day, I guess they have to do something.

Ouch, graph via CNBC

Insider Trading

This is where the plot thickens. One would expect, upon announcement a coin is under consideration for the much-coveted Coinbase listing, that the price action would go vertical.

I played detective and jumped on-chain, and it wasn’t long before I found this Ethereum address, containing about $380,000 in a bunch of these random coins (none of which I had heard of). As the below screenshot from etherscan shows, the tokens are Kormatika, RAC, Indexed, DappRadar and DFX Token. When were they bought? The day before the Coinbase post. Hmmm.

I dug through the price action, with every single coin resembling the below 7-day graph, of low volume and a whole load of nothing and then, BOOM – vertical jump on April 11^th upon Coinbase announcing they were considering them. The below example is that of RAC (do not ask me what it is, I have literally no idea). And ye, I’m using CoinGecko cos the coin is so obscure it doesn’t even have its market cap charted on CoinMarketCap.

So ye, all six coins in the wallet resemble this price action. I ran the returns and compiled the below table showing how the coins have moved:

Quite simply, this is unequivocal proof of insider trading. There is literally no possible way that this could be a coincidence. To quote Kevin Bacon from A Few Good Men (what a movie!), “these are the facts of the case, and they are undisputed”.

Precedent

This is not the first time we have seen this. In February, there was an even bigger case, when a fresh wallet was created that pumped seven (!) figures into a couple of newly listed coins pre-announcement.