Cryptocurrency exchange Coinbase is rolling out new measures aimed at preventing market participants from taking advantage of loopholes in its digital asset listing process.
In a new blog post, Coinbase CEO Brian Armstrong says that the firm has received reports that some entities are buying up certain digital assets just before they get listed on the crypto exchange.
According to Armstrong, these market participants may be conducting on-chain analysis to figure out what digital assets are being prepared for listing before the information becomes public, allowing them to benefit from the price surges associated with the announcement.
“Examples of this might include using on-chain data to detect when Coinbase might be testing new asset integrations or using small differences in Coinbase API [application programming interface] responses to detect when assets might be configured, but not yet launched. While this is public data, it isn’t data that all customers can easily access, so we strive to remove these information asymmetries.”
In an effort to address the issue, the Coinbase CEO highlights that the crypto exchange will now only start the technical integration process of the crypto assets it intends to list after making the information public.
“Going forward, we plan to publish externally once a decision has been made to list an asset, but before any technical integration work begins, to try and prevent on-chain data [from] giving signals to watchful traders.
In addition, we plan to publish only once a decision has affirmatively been made to list, vs. when we’ve decided to consider listing an asset.”
Armstrong also says Coinbase is working with external law firms to investigate suspected information leaks on upcoming digital asset listings by company insiders.
“These firms review our listing systems and tools, leveraging blockchain forensic analysis to trace transactions, and search for possible social or professional links between Coinbase employees and those engaged in any front-running activity.
If these investigations find that any Coinbase employee somehow aided or abetted any nefarious activity, those employees are immediately terminated and referred to relevant authorities (potentially for criminal prosecution).”
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