An insider trader turned 0.34 Ethereum ETH/USD, worth $878, into around $550,000 within the first eight hours after the launch of a memecoin called FERRET.
What Happened: Lookonchain data revealed the insider trader purchased 80 million FERRET tokens using 0.34 ETH worth $878 through five new wallets. The trade was initiated on Jan.16 within seconds of FERRET trading going live. Within the next few hours, the trader offloaded 11.8 million FERRET for 21 ETH, worth $54,000. This leaves the trader with 68.2 million FERRET, with an estimated value of $497,000 based on prices at the time of writing.
In less than 8 hours, an insider made ~$550K with only 0.34 $ETH ($878)!😱
— Lookonchain (@lookonchain) January 17, 2024
This insider spent 0.34 $ETH($878) to buy 80M $FERRET with 5 new wallets within one second of $FERRET opening trading.
Then sold 11.8M $FERRET for 21 $ETH($54K).
He currently holds 68.2M $FERRET, which… pic.twitter.com/Px2yPIbGyL
Why It Matters: Lookonchain highlights that both the insider and the deployer moved the FERRET tokens to the same wallet address. This rings alarm bells because it indicates the insider trader and the creator of the memecoin are the same person.
Such insider trading is common practice in the cryptocurrency space. Particularly memecoins are prone to these types of practices, as their creation and trading remains completely unsupervised and opaque to ordinary investors.
This has lead regulators like U.S. Securities and Exchange Commission chair Gary Gensler to repeatedly point out the "serious risks" involved in cryptocurrency trading.
Traders chasing rags-to-riches stories should be warned that for every such story there are many more pump-and-dump schemes.
Read Next: Trader Turns $5,000 Into $1.8 Million In 1 Month With $WIF - 'I Am At A Loss For Words'
Image: Pixabay
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