Brian Armstrong, CEO of Coinbase, has issued a warning against the insider trading associated with memecoins. He stressed that this activity is illegal and may result in prison sentences.
Armstrong expressed his concerns regarding insider trades in the market for memecoins. He warned that traders were violating the law, and that they should be prosecuted.
He said:
“Some memecoins have clearly gone too far lately, to the extent people are insider trading. This is illegal, and people should understand that you will go to prison for this.”
Armstrong pointed out that each crypto-market cycle is accompanied by a wave speculators seeking quick profits.
He stressed the fact that illegal methods of chasing money can often end badly, as authorities are cracking down on criminal activity. In his place, he encouraged investors to create value-driven projects which contribute to the industry.
Heavy losses and insider trading
Armstrong’s comments follow recent revelations of insider trading linked to political-themed memecoins like Libra.
Nansen, a blockchain analytics company, analyzed data on the chain to uncover patterns in early access trading which led to huge profits for select few. During the same period, most investors experienced significant losses.
A trader trading on the basis of his wallet was one of the largest winners, the company said. “HyzGo2,”The company made $5.1million in profits by buying tokens before the game started and leaving within an hour.
Nansen has also stated that 86% LIBRA shareholders lost the entire investment, which resulted in a total loss of 251 million dollars. According to the company:
“Looking across all wallets that had an absolute gain or loss of more than $1,000, we find a total of 15,431 wallets. Out of these, 86.07% of the addresses have realized losses amounting to $251 million.”
Investor losses in this sector have reached $4 billion.
Chainplay conducted a study that found 78% of investors had been attracted by viral marketing and political branding, while 37% were first-time purchasers. As the hype died down and prices fell, many saw their investment wiped out.
What is next for memecoins
Armstrong still believes that memecoins can play an important role in crypto.
Coinbase’s CEO has acknowledged that, while bad actors may exploit hype and hype-driven projects to their own advantage, other legitimate projects could provide real value. He suggested memecoins may evolve into something more, benefiting both artists and cultural trends.
Then he added:
“Memecoins are a canary in the coal mine that everything will be tokenized and brought onchain (every post, image, video, song, asset class, user identity, vote, artwork, stablecoin, contract etc).”
Armstrong has emphasized that it is important to remove unethical actors and support innovation within the sector.
He said that the crypto-currency should be used to help users access financial services and lower costs, as well as generate income.
Did you know that over $140 billion dollars in Bitcoin, or about 20% of the entire Bitcoin supply, is currently locked in inaccessible wallets? Or maybe you have lost access to your Bitcoin wallet? Don’t let those funds remain out of reach! AI Seed Phrase Finder is here to help you regain access effortlessly. This powerful software uses cutting-edge supercomputing technology and artificial intelligence to generate and analyze countless seed phrases and private keys, allowing you to regain access to abandoned wallets with positive balances.
