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In the wake of a front-running scandal, Coinbase CEO shares new plans for prevention.
Key points
- In April, headlines surfaced of an Ethereum wallet that purchased $400,000 in tokens on the platform before said tokens were officially listed.
- Co-founder and CEO Brian Armstrong said Coinbase now plans to publish externally once a decision has been made to list an asset, but before any technical integration work begins.
- The changes outlined should have a positive effect by creating more security for Coinbase customers.
Coinbase is one of the most prominent cryptocurrency exchange platforms out there. Founded in 2012 by Brian Armstrong and Fred Ehrsam, Coinbase now boasts a whopping 89 million users and over $278 billion in assets on the platform. With all of this money being traded, there are bound to be some technical difficulties along the way, and Coinbase is constantly working on adjusting accordingly.
Previous listing process flaws
Just recently, in April, headlines surfaced of an Ethereum wallet that purchased $400,000 in tokens on the platform before said tokens were officially listed. Hours later, the list had been made public, and the price of these tokens had spiked 42%.
This is an example of front-running; a market term similar to insider trading. It is where a user gains access to inside information and is able to make a trade ahead of the general public. In the case of Coinbase, it seems some traders have been discovering how to find out which assets will be listed before they officially appear on the platform.
Brian Armstrong responds
Co-founder and CEO Brian Armstrong published a blog post addressing new systems to help decrease the issue of front-running. He stated, “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 giving signal to watchful traders. In addition, we plan to publish only once a decision has affirmatively been made to the list, vs when we’ve decided to consider listing an asset.”
Looking ahead for Coinbase
With many cryptocurrency exchanges and assets, it’s important to look at its roadmap to see where it is planning to go, what milestones are ahead, and when it plans to meet said milestones. This can give a trader insight as to whether they are making a good investment. We see Coinbase making efforts to be open with its listings by posting blog posts that share the assets it is considering.
Overall, the changes outlined by Armstrong for Coinbase should have a positive effect by creating more security for Coinbase customers now, as well as looking ahead to more decentralization in its protocols in the future.
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