A new set of processes is being implemented by Coinbase’s CEO, Brian Armstrong, in an effort to combat insider trading and asset listing front-running.
Insider trading and other allegations of wrongdoing in connection with Coinbase’s token listings have been addressed by CEO Brian Armstrong recently. For as long as a token is “legal and safe” to list, the exchange plans to keep it on the list.
CEO Brian Armstrong addressed the community’s concerns about Coinbase’s listing process on Thursday in a blog post. According to him, the corporation is implementing improvements to address any possible gaps in its asset listing procedure that may allow insiders to have a leg up on the competition.
Once an asset is listed on Coinbase, the market tends to rise in price. On-chain data and discrepancies in the platform’s API answers were formerly exploited by expert traders to forecast fresh asset listings. They’d buy the coins before Coinbase lists them and then sell them as soon as the listing is made public, relying on a spike in value. In the past, Twitter users have shared on-chain proof of similar cases.
This data is publicly available, but not all clients have access to it, therefore we are working to reduce these information asymmetries,” Armstrong said in a blog post. In order to avoid any leaking of on-chain data that frontrunners may exploit, he added that Coinbase will announce its choices to list an asset as soon as it makes them and before it does any technical integration.
Other changes include marking risky assets, adding ratings and community evaluations for each listed asset, and investing more in screening assets for possible front-runners, perhaps taking tokenonomics and on-chain statistics into account before listing a currency. There will be certain things we don’t receive, but these investments will help us improve,” he said.
Coinbase CEO Brian Armstrong said that “wittingly or unknowingly, leak information to outsiders participating in illicit activities” is a possibility when it comes to insider trading. Coinbase, on the other hand, declared that it has “zero tolerance” for insider trading and would not hesitate to remove any staff discovered aiding and abetting any illicit actions.
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