Does Insider Trading Explain Binance’s Reason not to List WePower and Elastos?

Does Insider Trading Explain Binance’s Reason not to List WePower and Elastos?

Binance’s announcement earlier in the week that it had handed a free listing to the Zilliqa project ahead of Elastos and WePower continues to stir controversy, with accusations now emerging that the decision may have been the result of a desire to profit from insider trading. 

The allegation appears, at this stage, to be an entirely speculative one but has been driven by the observation of a sharp increase in the price of the ZIL token in the hours preceding its entry onto the Binance trading platform. 

Zilliqa Surprise Listing

Binance had taken the decision to eliminate both Elastos and WePower from the most recent outing of its “Coin of the Month” competition, citing violation of its voting principles during what was the sixth edition of the monthly contest which sees a free listing allocated to the project achieving the highest number of community votes in its favour.

The exchange has not provided any details as to what exactly constitutes a voting violation, resulting in one retort on Twitter from the Elastos project team of “drifts” in Binance’s reasoning and a subsequent request to refund the estimated $150,000 USD that Elastos supporters had paid collectively to participate in the vote. 

Shortly after the announcement, however, numerous accusations appeared on both Twitter and Telegram that the Binance decision was itself the result of a Machiavellian attempt to hide behind moral concerns over the financial incentives provided by both WePower and Elastos to mobilise votes in their favour, in order to implement an insider trading strategy that involved purchasing ZIL token before the official, surprise announcement.

What Happened Exactly?

The accusation has been fuelled by an observation of a noticeable increase in price in the ZIL token in the four hours preceding its formal listing on the Binance platform at around 6am UTC, Monday 5th March. 

Zilliqa Trading

              Source: Coinmarketcap.com

Whilst it is perfectly normal for any token to undergo a sharp increase in price at the moment of its listing on Binance, it is, however, the price increase which occurred over the four hours prior to that listing which has intrigued many observers who also point out a concurrent increase in trading volume.

The publication on the Binance website of the surprise official announcement of the Zilliqa listing is itself time-stamped at 05:52 UTC, which also appears to coincide with the moment the coin first began trading on the exchange. 

Announcement Binance

It should be pointed out that this is not necessarily the result of a decision driven by a desire to profit from a Zilliqa surprise listing,” one Elastos voter stated. “Personally, I think it’s more likely that there was an employee or two who caught wind of the announcement ahead of time and leaked the information to friends and family on the outside world.”

If the Zilliqa markets were indeed rigged during those hours, traders would have been well positioned to enjoy up to 60% profits as a result of the insider knowledge. 

The Zilliqa controversy adds to a week of woes for the Binance platform after it emerged on Wednesday that some Binance accounts had witnessed a disappearance in funds.

Binance itself has, however, stated that there was no compromise of its platform security, that the episode was likely a result of a successful phishing scam of account credentials and was limited to Via coin wallets. It has since restored all lost funds to victims of the theft.