Just hours after Coinbase published a blog post that revealed the latest tokens being considered for listing on its exchange, crypto Twitter mainstay Cobie flagged an Ethereum wallet that purchased more than $400,000 worth of the tokens on that list.
The problem is that the user who controls the wallet, the trading activity of which is publicly viewable on the Ethereum blockchain, wrapped up their token shopping spree three minutes before the list was public knowledge.
The trader appears to have focused solely on tokens under consideration for listing on Coinbase, suggesting advanced knowledge of the list before it was published. The tokens purchased by the wallet are now worth more than $572,000, amounting to a 42% return on investment in less than 24 hours.
On Tuesday afternoon, Coinbase had yet to acknowledge the unusual and potentially unethical trading on either of its Twitter accounts. It had also not yet responded to a request for comment from Decrypt.
The Coinbase Medium blog post announcing the new token listings went live on Monday, April 11, at 9:05 p.m. Eastern Time.
On Tuesday morning, just before 10 am Eastern, Jordan Fish, a former product manager who goes by the pseudonym Cobie on Twitter and in the broader crypto community, flagged an Ethereum wallet that bought six of the tokens mentioned in Coinbase’s blog post right before it went public.
Found an ETH address that bought hundreds of thousands of dollars of tokens exclusively featured in the Coinbase Asset Listing post about 24 hours before it was published, rofl pic.twitter.com/5QlVTjl0Jp
— Cobie (@cobie) April 12, 2022
“Found an ETH address that bought hundreds of thousands of dollars of tokens exclusively featured in the Coinbase Asset Listing post about 24 hours before it was published,” he wrote, including a screenshot that showed big purchases of Indexed (NDX), Kromatika (KROM), DappRadar (RADAR), RAC (RAC), DFX Token (DFX) and Paper (PAPER).
Over 11 hours, the wallet spent $88,942.48 buying KROM, $80,023.48 on DFX, $72,299.45 on RADAR, $70,635.74 on RAC, $64,864.59 on NDX, and $27,309.96 on PAPER.
Just being considered for listing on Coinbase’s cryptocurrency exchange is enough to make a token’s price jump as much as 60%, if only for a little while.
Since the Coinbase blog post went live last night, each of those tokens has increased dramatically in price. On Tuesday afternoon, Kromatika was up 40%, DFX up 42%, DappRadar up 53%, RAC was up 22%, Index up 43%, and Paper up 63%.
It bears repeating that the tokens haven’t yet been made available on Coinbase’s exchange and might not be. Right now, they’re just being considered for listing. The blog post goes on to warn that users attempting to add the tokens to their Coinbase account before an official listing could experience a permanent loss of funds.
The similarity to the OpenSea unethical trading scandal was not lost on one Twitter user.
They joked that Coinbase had hired Nate Chastain, the NFT marketplace’s former head of product who resigned after allegations he used insider knowledge to front run NFTs before their listings went public.
Didnt realize OpenSea Nate had moved to Coinbase
— (K)rutches (@McDonaldsXBT) April 12, 2022
In September, OpenSea confirmed an employee had used “burner wallets” and insider information to flip NFTs before they became featured collections on OpenSea. Within two days, Nate Chastain left the company and OpenSea announced it had hired a third party to help review and recommend changes to its employee policies.