Possible Insider Trading of Osmosis (OSMO) Uncovered in Binance

Fresh concerns of a likely crypto insider trading have emerged as an unknown wallet address purchased 2,029,846 OSMO tokens barely 24 hours before Binance’s announcement to list the asset.

Colin Wu, a journalist, told his 231,500 followers in a recent tweet that ahead of Osmosis (OSMO) listing on Binance, a wallet address accumulated over 2 million OSMO tokens at $1.34. He notes:

“One day before Binance announced the listing of OSMO, an address (osmo19muml8sjpnecnm8geul4l3zfju24l04mpuppy7) bought 2,029,846 Osmos at $1.34, sparking discussions about “insider trading.”

The Osmosis address (osmo19muml8sjpnecnm8geul4l3zfju24l04mpuppy7) purchased a cumulative amount of 2,029,846 OSMO tokens at an average price of $1.34 just before Binance’s announcement. The total purchase was approximately worth $2,719,993.

OSMO Token Spikes 25% After Listing Announcement

A few hours after the purchase, Binance released a statement early on Friday, declaring an interest in listing the asset in the Innovation Zone. An hour following Binance’s announcement, the asset surged by 29% within 3 hours to a peak of $1.73 before facing a slight retracement to about 25%.

As expected, after a new token’s listing on Binance, there is a spike in demand for the asset. The listing is accompanied by a rally in the token’s price. After the listing announcement, Osmosis (OSMO) has yielded nearly 25% gains for holders. 

Data from the Osmosis chain explorer reveals that the address in question currently has a cumulative value of $5.3M, with an OSMO balance of 1.7M tokens worth $2.7M as of press time. 243K OSMO tokens have been delegated, with 1.5M tokens currently unbounded.

According to the announcement on the Binance blog, the exchange opened trading for the following spot trading pairs: OSMO/BTC, OSMO/BUSD and OSMO/USDT. 

According to Wu, Binance has begun investigating the matter, as revealed by the exchange. 

Insider Trading A Growing Concern for the Crypto Industry

Cases of insider trading within the cryptocurrency community have been minimal, largely due to the industry’s infancy. On June 1, the U.S. Department of Justice charged a former OpenSea executive Nate Chastian with a scheme to commit NFT insider trading. OpenSea fired Chastian following reports of the top exec’s insider trading schemes.

A month later, the DoJ filed charges against three individuals, including ex-Coinbase employee Ishan Wahi, for insider trading. As The Crypto Basic reported shortly after the charges, lawyer John Deaton mentioned that he sees the SEC going after Coinbase following the charges brought on Wahi. 

Binance CEO Changpeng Zhao told Fortune in May 2022 that the exchange has “a zero-tolerance policy” on insider trading. Zhao told users to email evidence of anything suspicious to [email protected], a whistleblower email address.

Zhao told users in a tweet that the exchange tries not to let project teams know when the token will be listed on Binance. The Binance CEO shared this information in response to a research report by compliance software producer Argus, which highlighted how 46 crypto wallets had purchased specific cryptocurrencies in the week before those coins listed on major exchanges like Coinbase and Binance. 

There are many speculations on whether this was truly a case of insider trading or just one lucky investor.