Insider trading? Trader buys memecoins ‘in the same second’ of Binance listings 
Cryptocurrency Oct 25, 2024 Share
Binance, the leading cryptocurrency exchange, recently started listing some Solana-based memecoins, making these low-liquidity speculative cryptocurrencies surge in price. In this context, an anonymous trader is profiting from buying these coins “in the same second” of the listing announcements.
While it is unclear whether it is the fruit of insider trading, which would be illegal, or a high-quality trading bot, this strategy is working, earning the market’s attention.
According to a Lookonchain post on October 25, the trader made over $150,000 while scalping Binance’s listings. Scalping is a trading strategy that is even faster than the day trade. This happens when someone sells an asset seconds or minutes after buying it.
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Notably, the onchain analyst reported that the purchases happened “in the same second” when Binance announced MOODENG and GOAT perpetual contracts, raising suspicion of insider trading activity.
A savvy trader has made $140K in less than 20 minutes by monitoring #Binance's new cryptocurrency listings!
In the same second that #Binance announced the listing of the $MOODENG perpetual contract, he spent 1,300 $SOL to buy 2.77M $MOODENG and quickly sold for 2,109 $SOL,… pic.twitter.com/9hvN44IWLa
— Lookonchain (@lookonchain) October 25, 2024
Insider trader or trading bot profits with Binance’s memecoin listings
Onchain data shows the trader bought 2.77 million MOODENG with 1,300 SOL on Jupiter, a Solana-based decentralized exchange. Two minutes after the purchase and Binance listing, the address sold all of it for 2,109 SOL.
This scalp rendered the anonymous trader – and potential insider – 809 SOL of realized profits worth $140,000.
Interestingly, the address applied a similar strategy on October 24 with the memecoin GOAT, also after Binance’s listing announcement. Yesterday’s trade resulted in a 99 SOL profit worth $17,000, according to Lookonchain.
As of this writing, MOODENG trades at 0.1598 SOL per token, up nearly 115% since before Binance’s listing announcement.
MOODENG/SOL on Raydium, five-minute chart. Source: dexscreener.com / Finbold
Crypto insiders, memecoins, and the Greater Fool Theory
On Finbold, we have reported other cases of remarkable profits acquired by trading meme coins. For example, an anonymous trader turned $368 into $2 million in three days, while another speculator achieved a remarkable 3,329-fold return.
Nevertheless, we have also seen cases when crypto insiders could have used non-public information to gain an edge over the market and profit from it. Other stories raised doubts about whether a profit was from smart or insider trading activity, reminding speculators to be cautious.
Essentially, memecoins have characteristics that resemble financial bubbles, which traders should be aware of. The “Greater Fool Theory” explains the dynamics seen on these speculative tokens, moved primarily by social hype and buzz without any organic demand.
Traders buy the token with the expectation that a “greater fool” will pay a higher price in the future. However, the scheme fades away once there are no “greater fools” to continue fueling the price up, often facing liquidity issues and death spirals.
Insider traders can often take advantage of the “greater fools” by creating and promoting memecoins, positioning themselves in beforehand. They benefit from information asymmetry and the hype of a market that insists on gambling with poor fundamental digital assets.