Coinbase Insider Trading: Litecoin Edition

6 min readJan 10, 2018

I have long suspected insider trading regarding Litecoin and Coinbase/GDAX, the problem is I did not want to mention this publicly because of Charlie Lee’s cult following, and I’d be pissing off too many people at once.

Now that Charlie Lee has admitted to dumping all of his Litecoins (Archive) after All Time Highs, I believe it’s a good time to bring this up.

Especially after concerns of insider trading regarding Bitcoin Cash.

Charlie Lee and Coinbase

Problem 1: Charlie Lee was an employee of Coinbase when Coinbase added Litecoin, a crypto-currency he ‘created’ by simply copying Bitcoin and changing the name and adjusting a few variables and a hash function taken ‘scrypt’ from another crypto-currency.

Problem 2: Charlie Lee likely had significant holdings of Litecoin while he worked for Coinbase, and therefore may have asked many times for Coinbase to add Litecoin. Being an engineer at Coinbase, he may also be responsible for implementing the code to add Litecoin to Coinbase.

Problem 3: The Litecoin community was essentially dead prior to being listed on Coinbase, on reddit. The only people who wanted Litecoin listed, were people hodling their Litecoins, and presumably, Charlie Lee.

Litecoin Markets subreddit on March 2017. Nobody was posting.

Charlie Lee kept promising Coinbase will add Litecoin on the Litecoin Telegram.

Uploaded April 12th, 2017 Source (Archive)

In my opinion, there’s a conflict of interest going on between Coinbase, and the ‘creator’ of Litecoin, Charlie Lee.

Out of all of the other crypto-currencies they could add, they add the one with a practically dead reddit community and no transaction activity?

Problem 4: Nobody was using Litecoin!

Here’s a chart showing the transactions involving Litecoin. Nobody used it. Even after GDAX added it, nobody cared about it.

Source (Archive)

Segwit Upgrade was not a legitimate catalyst for Litecoin price rising.

Litecoin was not running into any of the capacity limits, and in fact, Litecoin effectively has a 4MB block size already.

In my opinion, the SegWit upgrade was simply being copy and pasted from Bitcoin Core, into Litecoin, in order to drum up demand for Litecoins, as part of a pump and dump.

Problem 5: Irregular trading activity prior to Litecoin announcements.

Prior to GDAX and Litecoin being added, there was irregular trading activity on Litecoin, indicating someone may have leaked information.

Time is 18:17 UTC Source

It was not just Litecoin on GDAX that resulted in a pump, there was also a pre-pump when it was added to Coinbase.

On April 5th, 2017, Charlie Lee conducted a fictitious conversation ‘asking’ his boss to add Litecoin, I call this conversation fictitious simply because Charlie Lee, working as an engineer at Coinbase was likely responsible for integrating Litecoin with Coinbase and he already knew in advanced that it was ‘approved’.

The time of this Tweet is April 5th, 2017 at 14:15 UTC Source (Archive)
Suspicious activity few days prior to announcement on March 30th, 2017

After Litecoin essentially being dead, price wise for years, just days before Coinbase announces plans to integrate it, it skyrockets.

I do not think this is an innocent coincidence. Clearly, someone knew in advance and started loading the truck with Litecoins.

Problem 6: Charlie Lee quit working for Coinbase almost immediately after Litecoin was added, to ‘focus’ on Litecoin.

Source (Archive)

Coinbase Adds Litecoin: May 3rd, 2017
Charlie Lee Quits working for Coinbase: June 9th, 2017

The question I would pose to Coinbase, would Litecoin have been added to Coinbase, if Charlie Lee never started working there?

Why did Charlie Lee quit almost immediately after Litecoin was listed on Coinbase? It gives the appearance that he was only there to influence Coinbase’s management, and once he got what he wanted, he quit.

There was no reason to add it to GDAX, it was a dead coin, and even remained dead after GDAX added it.

Unlike Ethereum, nobody was demanding Litecoins other than Litecoin hodlers who wanted to sell at a higher price.

Charlie Lee liquidates his Litecoins

Once Litecoin hit all time highs, around $370, suddenly Charlie Lee was suddenly concerned about ‘conflicts of interest’ and he liquidated all of his Litecoins.

Source (Archive)

Oddly enough, it was never a conflict of interest before. Only once Litecoin went up 9,150% in value was Charlie Lee concerned about ‘conflicts of interest’.

Hodl my litecoins, while I sell for dirty fiat USD.

Source (Archive)
Charlie Lee executes his sell on December 20th, 2017.

Now when you’re looking at this chart, you’ll notice that in December Litecoin had a dramatic increase in value.

We’re going to investigate why.

Dramatic increase on December 8th.
Source (Archive)
A trader successfully withdraws Litecoin after Bitfinex refused to allow him to withdraw his money.
A trader successfully trades for Litecoin after Bitfinex refused to allow him to withdraw his money.

In other words, the only reason Litecoin increased 285% in December was due to people using it as an avenue to escape Bitfinex. These people will eventually sell for Bitcoin, or USD, and of course, the price will crash.

A lot of people saw the price of Litecoin rising, not understanding the reason why, and piled into it to join the party, adding a bunch of fuel to the Pump and Dump.

To make matters worse, Charlie Lee liquidated his Litecoins nearly immediately after Brian Kelly was telling people to buy it, and made false statements regarding Litecoin on CNBC.

Steam does not accept Litecoin, or any other crypto-currency at the moment.


In my opinion, the circumstances regarding Litecoin, Coinbase, and Charlie Lee are suspicious. If I was bringing on someone that created their own crypto-currency and I knew they wanted me to list it on my exchange, I would have asked them to liquidate their positions in it prior to bringing them on.

Especially when, in my opinion, Litecoin is simply a copy and paste of Bitcoin with a few constants changed and one function switched out. If there was significant transaction activity prior to it being listed on Coinbase and GDAX, you could have made the argument that there was real demand for it.

But as I have shown, that is not the case.

Trade carefully.




Blog for @Bitfinexed on Twitter. Exposing possible fraud by largest Bitcoin exchange, Bitfinex/Tether