Coinbase Under Scrutiny for Alleged Frontrunning in ‘Base Is for Everyone’ Token Dispute

At least three crypto wallets profited by purchasing tokens ahead of Base’s official announcement on X.

Token launches have frequently been a controversial subject, often criticized for their poor execution, which enables those with access to insider information to profit through front-running schemes.

The latest example revolves around the “Base is for everyone” token, launched by Coinbase’s Ethereum Layer 2 solution, Base, on Wednesday. According to blockchain tracker Lookonchain, three crypto wallets purchased tokens before Base made its official announcement on X, yielding significant profits.

At roughly 19:30 UTC on Wednesday, Base revealed the debut of its token, which was minted via Zora, an on-chain social network that transforms content into tradable coins. The token’s market cap surged to over $15 million, bringing substantial gains to at least three wallets that had purchased tokens before the official announcement.

“Three wallets bought significant amounts of ‘Base is for everyone’ before @base posted and sold them, making a profit of approximately $666K,” Lookonchain shared on X.

Wallet address 0x0992 spent 1.5 ether (ETH) to acquire 256.39 million tokens at 12:30 PM UTC and sold them for 108 ETH after the announcement, making a $168,000 profit in just over an hour. Wallet 0x5D9D invested 1 ETH ($1,580) and made $266,000, while wallet 0xBD31 earned $231,800.

However, the token’s market cap fell to under $2 million after Base unveiled a new coin for its FarCon poster, draining liquidity from the “Base is for Everyone” token and leaving late entrants at a loss.

Since then, the token’s valuation has regained momentum, with the market cap of “Base is for Everyone” surpassing $18 million as of this writing, according to data from DEX Screener. Base creator Jesse emphasized the goal to “normalize putting all content on-chain.”

Coinbase clarified that “Base is for Everyone” is not the official cryptocurrency of Base, and that the Layer 2 solution did not directly sell the tokens. “Base posted on Zora, which automatically tokenizes content,” a Coinbase spokesperson told CoinDesk.

A legal disclaimer on Zora and a statement from Base on X clarified that Base will never sell these tokens. “To be clear, Base will never sell these tokens, and they are not official network tokens for Base, Coinbase, or any other related product. The content we share is creative, and we’re going to keep bringing culture on-chain,” Base explained.

The volatility and boom-bust cycles of smaller tokens often lead to a negative wealth effect, where a select few profit handsomely while the majority suffer losses. This dynamic drains liquidity from the broader crypto market.

The larger the boom-and-bust cycles associated with these tokens, the more pronounced the negative wealth effect. For example, the launch of LIBRA and TRUMP tokens earlier this year wiped out millions in investor wealth, coinciding with a major peak in Bitcoin prices and the broader crypto market.