12 new currencies launched in 15 days, Coinbase is deeply involved in the rat warehouse storm

Original title: "Coinbase Rat Ware Suspect Cloud | Chain Catcher"

Author: Hu Tao, Chain Catcher

Behind the frequent emergence of rat warehouses

For a long time, Coinbase has been synonymous with compliance and self-discipline in the cryptocurrency industry, but in recent months, Coinbase’s image has almost subverted.

The reason is that Coinabse’s listing of new coins has repeatedly experienced the phenomenon of rat warehouses, that is, the phenomenon of abnormal surges occurred a few days before Coinbase officially announced the launch. According to Chaincatcher’s observations, more than half of the coins launched on Coinbase this year have experienced the aforementioned phenomenon to varying degrees. For example, the prices of the recently launched ACH and PLA have risen by nearly three times and Nearly 4 times, MASK and other currencies launched in July also doubled a few days in advance.

The phenomenon of rat warehouses has repeatedly appeared, which reflects that Coinbase has serious internal control problems in the currency listing process.

As the leading cryptocurrency exchange in the industry, Coinbase has pursued a "delicate and beautiful" currency listing strategy before March this year, and basically only launched the industry-recognized The more mainstream currencies with high popularity and long online time, such as SNX, ROSE, REN, OMG, MANA, etc. that will be launched in 2020, rarely have abnormal phenomena of early rise.

Before Coinbase was officially listed on April 14 this year, Coinabse had only launched 11 new currencies in the past three months. Only 6 new currencies were launched last month, but since June, the frequency of Coinbase’s currency listings has entered a stage of great leap forward, with 10 new currencies launched that month, and 12 new currencies launched in the first half of August. In contrast, Coinabse has launched less than 20 new coins in total in 2020.

Coinbase’s monthly new listings this year

Behind the substantial adjustment of the currency listing strategy, it may be driven by the performance pressure of Coinbase after entering the capital market. On April 14 this year, Coinbase landed on the New York Stock Exchange under the aura of "the first stock of a cryptocurrency exchange". %, which caused huge losses for investors who bought Coinbase shares early.

The main reason for the decline in Coinabse's stock price is the sharp decline in trading volume. According to Coinabse’s first-quarter financial report, the income from transaction fees accounted for 85.5% of the total income, and the dominant position is very obvious. The decline in trading volume will inevitably lead to a further decline in Coinbase's revenue, which will have a negative impact on the stock price.

In the latest quarterly financial report, Coinbase also publicly stated that due to the decline in asset prices and volatility levels, data such as the number of retail monthly trading users and total trading volume may It will decline in the next few months and warn investors.

Therefore, in the absence of a significant recovery in the market heat, Coinbase needs to launch more new currencies in order to further increase the transaction volume and corresponding fee income To stimulate users' enthusiasm for trading. At the end of June this year, Coinbase founder Brian Armstrong publicly stated that he would list all legally viable cryptocurrency assets, "We are asset agnostic because we believe in the free market and consumers should have the right to choose in the encrypted economy."

In this context, Coinbase’s review of listings has become more relaxed. In June of this year, Coinbase also announced that it will launch DOGE and SHIB, two mblockquotee currencies with huge community traffic but lack of technical content, especially the latter, which once surprised the encryption community.

It is also from June that the frequency of Coinbase’s currency listing has been greatly accelerated, and the currency listing team has also expanded accordingly, but the situation of the mouse warehouse has also greatly increased Proliferation reflects that Coinbase's internal control construction has not kept up with the pace of its currency listing, and the confidentiality mechanism has not been implemented in place.

Currently, the phenomenon of Coinbase’s existence of rat warehouses is almost an “open secret” in the eyes of members of the encryption community at home and abroad, and criticism is also spreading rapidly, making Coinabse a The reputation of the industry's most compliant exchange has taken a serious hit. At the same time, this phenomenon has also formed unfair competition in the encryption market and deteriorated the trading ecology of the encryption market.

A discussion in a certain telegram community

"Rat warehouse phenomenon It will reduce the credibility of the exchange, and users will be hurt because of high-priced orders.” DAO Square co-founder Dashuo said to the chain catcher, “The harm to the industry lies in supervision. Excessive manipulation will be given to the regulators. Bring a bad impression to the outside world, especially the unself-discipline behavior of head exchanges."

Potential

Then, what links may have gone wrong in Coinbase’s mouse warehouse phenomenon? Is Coinbase actively doing evil? After many interviews, the chain catcher summarized three potential possibilities.

The first possibility is that Coinbase insiders actively conduct insider trading or leak relevant information to stakeholders, which is the most common possibility of the rat warehouse phenomenon. Since the Coinbase listing list and listing time are all in charge of the exchange, and only insiders know the accurate information, there is completely room for insider trading.

The second possibility is that after Coinbase communicated with the project party about the currency listing, it was leaked by the project party personnel. In June of this year, Coinbase founder Brian Armstrong tweeted that he was interacting with and responding to many asset issuers, so during the communication process between Coinabse and the project party, the project party staff may be informed of the listing information in advance, and then proceed Corresponding insider trading operations.

"There is a need for multi-party communication before the launch, and the projects to be launched will also make preparations and disclose major progress to match the market." Dashuo said.

The third possibility is that the Ethereum address of Coinbase’s currency-related personnel’s address was leaked, and a large-scale mouse warehouse phenomenon was formed after the outside world tracked their address information. According to the information provided by an investor to the chain catcher, an address starting with "0xfA09" will buy the corresponding tokens in small amounts one day before Coinbase announces the currency listing information and recharge to the official Coinbase address. It is suspected that Conibase tested its Charge and withdraw function.

The ACH and RLC transaction information of this address is nearly a week earlier than the official news

From STORJ, CRV, etc. in March, to RLC, MIR, etc. in May, to ACH, PLA, etc. Carry out small purchases and transfer operations in advance, and the early rise time of these tokens is also very close to the operation time. However, in the last two listings on Coinbase, this address has not been operated accordingly, perhaps the official has discovered the loophole.

This kind of behavior may not be the initiative of Coinbase to leak information, but objectively it is still due to the negligence and negligence of Coinbase's internal control. In the more serious cases, the relevant on-chain addresses that may cause this phenomenon have not been replaced until recently. For this situation, Coinbase still needs to bear the main responsibility.

How to solve the problem

In the traditional financial market, the mouse warehouse phenomenon It has long been the target of regulatory authorities. Since all investors invest in their real names, the regulatory authorities can obtain the identities of the large purchasers involved in the abnormal stock rise, and then conduct social relationship investigations between the identities of these purchasers and the identities of insiders, and Retrieve relevant chat records, and then check whether there is a mouse warehouse phenomenon. Once verified, insider traders are often fined heavily.

However, in the cryptocurrency market, there are currently very few regulatory agencies that supervise the process of listing cryptocurrencies in their countries, and because cryptocurrencies are often used in many different Online trading on exchanges, including decentralized exchanges that do not require identity authentication, leaves a lot of room for insiders to operate.

“The only way to avoid the rat warehouse is to rely on the party in power to strengthen self-discipline or be restrained by supervision.” Dashuo said.

If the rat warehouse phenomenon continues, it will inevitably cause irreversible damage to the image of Coinbase and even the industry. Coinbase has the responsibility to solve this problem as soon as possible and promote industry norms and related system formulation.

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