Leading crypto exchange Binance on Monday dismissed a rumor regarding an alleged insider trade of the OSMO token a day before it was listed on the exchange.
An insider trade occurs when a token or asset gets traded based on information in a company that is not open to the public. In most countries, insider trades are considered illegal and guilty individuals can be penalized.
What Happened?
On October 28, Binance announced the listing of the OSMO token, which is the governance token of decentralized exchange (DEX), Osmosis protocol.
An hour after the token was listed on the exchange, a Chinese reporter with the Twitter username, Wu Blockchain, made a post. The reporter cited a particular address with on-chain proof while stating that the address owner bought over 2 million OSMO tokens about a day before it got listed on Binance. At that time, the token traded at $1.34.
Wu’s comment implied that Binance had faced a case of insider trading. The reporter added that the crypto exchange was investigating the matter.
Binance Responds
Binance dismissed the rumor via a Twitter thread, stating that the “data presented on the Osmosis blockchain explorer was misinterpreted.”
From the investigation made by its security team, Binance confirmed that a large amount of the OSMO token was purchased a day earlier. It further stated that the entire 2 million tokens were quickly traded for another token, ATOM, before the news of the listing.
The exchange then added that the wallet address in question had earlier purchased OSMO tokens in November 2021. Binance’s response comes two days after the matter was raised.
“The conclusion of our investigation is this was a false flag, since the large purchase of OSMO was sold prior to OSMO’s listing announcement on Binance. These were legitimate transactions, not insider trading,” Binance added.
Unlike Binance, the American-based crypto exchange Coinbase has admitted to a case of insider trade. In September, a former Coinbase manager pleaded guilty to insider trading, where he shared confidential information with two accomplices.
