Shushing emoji behind Coinbase logo
Illustration: Christopher T. Fong/Protocol

Coinbase makes a token attempt at crypto transparency

Protocol Fintech

Good morning, and welcome to Protocol Fintech. This Friday: insider-trading clouds over Coinbase’s attempt at transparency, new revelations in the Axie hack, and Citi’s tech spending spree.

Off the chain

What does North Korea have against play-to-earn games? At least with the Sony hack, there was a clear motivation: the Hermit Kingdom’s anger at the movie studio over “The Interview,” which roasted its dear leader. But evidence that links a North Korean hacking group to the Axie Infinity heist is more curious. Maybe the hackers really, really hate NFT gaming?

— Owen Thomas (email | twitter)

A cloudy bid for transparency

Coinbase made a big push this week to be more transparent. But its plan to give the crypto market a heads-up on tokens it’s considering to list just ended up making things cloudier, sparking accusations of insider trading.

The uproar underlined how, despite its dramatic growth, crypto faces a rough and often tricky path to legitimacy, with few guardrails in place despite lots of talk about how the space needs regulation.

Full disclosure seemed like a smart path for Coinbase. The company announced Monday it would start posting a list of tokens being considered for listing in “an effort to increase transparency by providing as much information symmetry as possible.”

  • Speculators have long agitated for Coinbase and other big exchanges to list their favored cryptocurrencies, with the belief that such support offers both legitimacy and liquidity, particularly for newer tokens.
  • Coinbase had previously kept its plans close to the vest, so the unexpected move to unveil a roadmap provoked a lot of head-scratching.
  • A well-known crypto podcaster, Jordan Fish, who goes by Cobie in the community, soon provided a theory. Fish said Tuesday he had found an Ethereum wallet that had “bought hundreds of thousands of dollars” worth of tokens “exclusively featured” in the Coinbase list “about 24 hours before it was published.”

Is Coinbase grappling with an insider trading problem? The scheme described in Fish’s tweet is classic frontrunning, a bet based on insider information: in this case, the listing of a cryptocurrency on a major exchange like Coinbase.

  • Coinbase’s big customer base means the listing of a token usually sends its price up. The company “had nothing further to share” about the listing announcement, a spokesperson told Protocol.
  • Crypto exchanges have grappled with insider trading allegations in the past. In 2019, there were allegations that Coinbase employees had bought Bitcoin Cash ahead of its listing. In 2021, the CFTC investigated Binance for insider trading. (Binance said at the time that it had a “zero tolerance” policy against insider trading.)
  • Amid raging debates over how to regulate crypto, embracing a new policy for token disclosures makes sense for Coinbase “given that crypto is desperately trying for legitimacy,” Rob Siegel, a Stanford Graduate School of Business lecturer, said. “Perhaps this is just Coinbase doing good governance and pushing it now so as to ‘stay clean.’”

But the timing is really odd. The disclosure post came across as “a weird attempt at damage control,” Alex Johnson, author of the Fintech Takes newsletter, said. It “makes it seem an awful lot like Coinbase knew that someone had an information advantage and had already acted on it,” he said. Now the question is whether regulators will act.

— Benjamin Pimentel (email | twitter)

A version of this story first appeared on Read it here.


The emergence of DeFi is shaking up the way consumers think about how they store value. For reference, Visa saw $2.5 billion of crypto-backed transactions in the first quarter of 2022. We’re seeing consumers really starting to use this in a way that even a year ago was kind of hypothetical.

Learn more

On the money

The Manhattan district attorney’s office charged a man for running unlicensed bitcoin ATMs. Robert Taylor, a New York resident, was allegedly illegally running 46 bitcoin ATMs across New York, New Jersey and Miami, charging customers up to 25% in conversion fees.

China’s banking association is warning investors against NFTs. The association, which also banned crypto trading last year, said that NFTs could lead to speculative trading, money laundering and illegal financing.

Citi is planning to spend $11 billion on technology this year. The budget is an 11% increase from last year, and a 30% increase from 2020. Stuart Riley, a technology executive, reported that the bank had more than 30,000 software engineers.

Portugal’s central bank granted a crypto license to a bank. Bison Bank is the first bank to receive a license to operate as a virtual asset service provider. A subsidiary, Bison Digital Assets, will operate as an exchange.

The latest on the Axie Infinity hack

North Korea’s Lazarus Group is allegedly responsible for the $622 million Axie Infinity hack last month, one of the largest DeFi hacks to date, in which the Ronin network was breached to access the funds.

While the wallet address suspected to be behind the attack has been known since the day it took place, the U.S. Treasury Department tied the wallet address to the Lazarus Group on Thursday and sanctioned the funds by adding the address to the Office of Foreign Assets Control’s Specially Designated Nationals List. Some of the funds have already been laundered, according to blockchain analytics firm Elliptic.


— Lindsey Choo (email | twitter)

The chart

March was a troubling month for the NFT market, with the dollar value of trades crashing and talk of a bursting bubble. The arrest of suspects in the Frosties rug pull reminded buyers of the risks in buying into these digital art projects. But there were also hopeful indicators. The number of wallets trading NFTs didn’t drop as much, and showed signs of recovery in early April.


Businesses — whether Web2 or Web3-oriented businesses that don’t want to hold crypto but do want to be able to interact with crypto holders — want to be able to offer that as a payment mechanism to their communities. The other is hands-on, where merchants are comfortable accepting crypto.

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Thanks for reading — see you Monday!

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