Insider crypto games: How one trader made millions on Trump announcement

​A recent incident in the cryptocurrency world has once again drawn attention to the issue of insider trading. An anonymous trader managed to earn $6.8 million thanks to well-timed investments that coincided with U.S. President Donald Trump’s announcement regarding the creation of a national crypto reserve. This event raised suspicions of using confidential information for financial gain.

On Sunday evening, via the Truth Social platform, President Trump announced plans to establish a national crypto reserve, which would include not only Bitcoin but also major altcoins such as Ethereum (ETH), Ripple (XRP), Solana (SOL), and Cardano (ADA). This news caused an immediate surge in the value of these cryptocurrencies. However, what drew particular attention was the activity of an anonymous trader, who, just a few hours before the official statement, placed large long positions with 50x leverage on the decentralized platform Hyperliquid.

According to Cointelegraph, on March 1, the trader transferred $5.9 million in USDC to Hyperliquid. Then, on March 2 at 14:49 UTC, just 35 minutes before the president's statement, he opened long positions on Ethereum. Using approximately $4 million, the trader createdpositions worth $200 million with high leverage. Sixteen minutes after Trump’s announcement, he began closing these positions from the Ethereum wallet address “0xe4d…02c62”, securing significant profits.

These actions have understandably raised concerns about insider trading. Using high leverage makes such trades extremely risky; even a minor price decline could have fully liquidated the positions, resulting in the complete loss of the initial capital. Carl Runefelt, founder of The Moon Show, remarked:

«This $200 million long on Bitcoin and Ethereum before the Bitcoin strategic reserve announcement, could be the biggest INSIDER TRADE I've ever seen. Smells illegal.»

Loading...

This is not the first case of insider trading in the cryptocurrency industry. There have already been documented instances of using confidential information for profit.

For example, in 2022, former Coinbase product manager Ishan Wahi was accused of leaking information about upcoming token listings to his brother, Nikhil Wahi, and friend, Sameer Ramani. Using this inside knowledge, they conducted trades involving at least 25 different cryptocurrencies, earning approximately $1.5 million in illegal profits.

In January 2023, Nikhil Wahi was sentenced to 10 months in prison for participating in this scheme.

Industry leaders’ opinions on Trump’s crypto reserve announcement

President Trump’s announcement of a national crypto reserve, which included not only Bitcoin but also Ethereum, XRP, Solana, and Cardano, sparked widespread debate within the crypto community. Many industry leaders expressed their views on this initiative.

Brian Armstrong, CEO of Coinbase, believes that the U.S. strategic crypto reserve should consist solely of Bitcoin. He noted that Bitcoin is the simplest and most logical choice as the successor to gold. In case diversification is needed, Armstrong suggested using a market-cap-weighted index of crypto assets to ensure objectivity.

Loading...

Well-known investor Fred Krueger supports an approach based on market capitalization for structuring the crypto reserve. He proposed the following allocation, excluding foreign assets and stablecoins:

- Bitcoin – 75%

- Ethereum – 12.4%

- XRP – 5.7%

- Solana – 3.1%

- Dogecoin – 1.4%

- Cardano – 1.0%

Smaller portions were allocated to Litecoin, Avalanche, Polkadot, and Cosmos.

Meanwhile, Jeff Park, head of Alpha Strategies at Bitwise, expressed disappointment regarding the inclusion of altcoins in the crypto reserve. He believes that adding assets of uncertain significance could raise suspicions of insider trading among U.S. authorities.

Loading...

Arthur Hayes, former CEO of BitMEX, stated that Trump’s plans and promises to create a U.S. national crypto reserve are just empty rhetoric. He emphasized that without congressional approval for borrowing funds or raising gold prices, the government will lack the resources to buy Bitcoin and other cryptocurrencies.

Thus, opinions among crypto industry leaders regarding Trump's initiative are divided. Some support the idea of creating a crypto reserve but suggest focusing exclusively on Bitcoin or considering market capitalization when selecting assets. Others question the feasibility of including certain altcoins and warn about potential suspicions of insider trading.

The need for transparency in crypto markets

In conclusion, the incident involving an anonymous trader who made millions on Trump's announcement once again highlights the issue of insider trading in the cryptocurrency industry. It appears that someone had prior knowledge of the administration’s plans to announce the creation of a national crypto reserve.

Trump had hinted at this possibility several months ago, but the exact timing of the announcement remained unknown. However, the well-timed opening of large positions raises serious suspicions.

Joint efforts from regulators, exchanges, and the community are necessary to create a transparent and fair environment where all participants are protected from fraud and manipulation. Completely eliminating insider trading may be unlikely, but making the market more honest is an entirely achievable goal.