Binance, the world’s largest cryptocurrency exchange, has suspended an anonymous account that allegedly made millions of dollars in profits through front-running. The account is said to accumulate altcoins before they are listed, manipulate prices, and sell them at a higher price after they are listed. Here are the details…
Binance CEO made a statement: Illegal profits will be donated
cryptocoin.com As we reported, Binance has been under fire from all directions lately. After the CFTC filed a lawsuit against the exchange earlier this week, another report emerged that alleged insider trading practices exploiting information with token listings. Referring to the on-chain data, data analyst FatManTerra pointed out that an unidentified person topped the listing of multiple altcoins on Binance, making huge 7-figure profits.
The account reportedly generated tens of millions of dollars in profits through these activities. Binance froze $2 million associated with the account before it was disclosed by on-chain data analyst “FatManTerra”. The user whose account was frozen did not request a review of the suspension. In response to another user’s comment, Changpeng Zhao (CZ), the founder of Binance, announced that the exchange will donate illegal profits to charities. CZ also stressed the importance of reporting potential leaks and illegal activity, stating that it is in the best interest of all.
Details about the movements of the account attracted attention
According to FatManTerra, the account with the wallet address starting with 0xd23 purchased $53,000 worth of FXS on Uniswap soon after it was set up. The account has split its trades into several small lots to avoid price drift and detection. The user bought FXS continuously for six days, and three days after the last trade, Binance listed FXS, causing the price to rise sharply. The account then drained all the tokens on the exchange.
It has been reported that the second wallet address, starting with 0x51, determined by FatManTerra, purchased TVK worth 131 ETH. Two days after the purchase, TVK was listed on Binance and 277 ETH came into the account. The user is said to have made a total of 16 pre-trading, which means they use insider-trading to purchase assets before they go public for profit.
The stock market has been under fire lately
Front-running is illegal in the securities market, but there are no specific regulations regarding it in the crypto market. Such internal trades can have significant consequences for individual investors. A cryptocurrency that can rise 20 percent can only rise 10 percent, and no one will understand that someone is stealing market profits with unethical behavior. It is unclear how the front-running account received information about the listings. The news emerged when Binance was sued by the US Commodity Futures Trading Commission (CFTC) on various charges, including insider trading.
Meanwhile, the exchange experienced more than $2.1 billion in net outflows on the Ethereum Blockchain last week. This follows growing regulatory issues for the largest crypto exchange. Withdrawal speed increased compared to normal activity and jumped after the CFTC announcement. Binance has also managed even bigger exits in the past. Last month, in February, when Binance announced that the BUSD stablecoin would be delisted, outflows exceeded $1 billion almost daily for several days.
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