Coinbase Director Conor Grogan has identified a frontrunning scandal in Binance, which appears to have run unchecked for over 18 months. The supposed initial transaction was detected to have taken place around May 2021. The frontrunner seems to have good access to Binance listing data before the public did. Further, there have been confirmed instances of frontrunning during the RARI, ERN and TORN listing.
What Did Actually Happen?
There were several instances of someone frontrunning the cryptocurrencies that were going to be listed on Binance. Much of these frontrunning transactions took place on 1-Inch, a few on UniSwap and a few on Sushiswap, some of the leading DeX platforms.
Six token listings have been confirmed by Conor Grogan. Namely:
- Rari Governance Token (RGT),
- Ethernity (ERN),
- Tornado Cash Token(TORN),
- Ramp Network (RAMP) and
- Gnosis (GNO)
- Rocket Pool (RPL)
According to Conor, a Coinbase Director, the frontrunner did the following during these token listings:
- Before RGT listing( 05 May 2021), the frontrunner bought $900k worth of RGT seconds before listing and sold them a few minutes after listing.
RGT Frontrunning| Source: Etherscan - During Ethernity’s listing (17-21 June 2021), the same frontrunner bought $78k worth of ERN before listing and sold it after the listing announcement.
ERN Frontrunning| Source: Etherscan - Around 9 June 2021, the same was attempted during Tornado Cash Token (TORN) listing.
TORN Frontrunning| Source: Etherscan - Around 21 March, during the Ramp Network(RAMP) launch, the same frontrunner was also active. Making a profit of $55,400, according to Colin Wu.
RAMP Frontrunning| Source: Etherscan - Again during the Gnosis Chain token launch in August 2021, the frontrunner was detected. Conor estimates at least $100k in profits for the frontrunning incident.
- The same frontrunner was again caught recently last week during the RPL Token listing.
The anonymous wallet address (0x5f…47db) bought 6193.46 RPL 10 minutes before Binance released the RPL listing announcement, and sold them all 10 minutes after the announcement, making a profit of 55,400 US dollars. The USDT and ETH used are all from OKX.https://t.co/xtrxxQx9BS
— Wu Blockchain (@WuBlockchain) January 18, 2023
Crypto Journalist Colin Wu also noted that the USDT and ETH, which were used during the frontrunning of the RPL token, were obtained from the OKX crypto exchange.
Was Binance Involved?
A single frontrunning might have been a genuine incident, but a series of frontrunning appears to have been diligently planned. Conor says there is a likelihood of a current or an ex-employee of Binance being involved. However, there is no concrete evidence. US authorities have earlier investigated Binance on the issue of insider trading.
Further, the suspected wallets were long identified and flagged in May 2021 by Wall Street Journal. Despite these incidents, the frontrunner’s wallet is currently active and has a balance of about $255k, all in USDT.
What Is Frontrunning?
Frontrunning is the practice of getting an unfair advantage of a pending or a future DeFi transaction and using prior knowledge to execute trade before others. This helps them buy lower and create artificial scarcity. Finally, frontrunners sell the asset to the original buyer at a higher price and take profit in the process.
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