Study finds 10-25% of token listings on Coinbase are prone to insider trading

Is the Coinbase case really over? In a recent study conducted by the University of Technology Sydney, researchers estimated that insider trading occurs in 10-25% of cryptocurrency listings on Coinbase.

The return of insider trading at Coinbase?

Earlier this year, the cryptocurrency exchange Coinbase had been the subject of several charges of insider trading within its ranks. In question, employees would have taken advantage of their positions to trade assets before their listing on the exchange.

It seems like this case is not an isolated case, quite the contrary. In any case, this is what we learn from a study carried out by the University of Technology in Sydney. According to the researchers, insider trading occurs in 10-25% of listings of cryptocurrencies on Coinbase.

The researchers manually collected data from the exchange between September 2018 and May 2022offering a panel of information on 177 asset quotes. The study consisted of observing price movements on each of these assets, 300 hours before their listing and 100 hours after.

published by editions Larousse

Their hypothesis was simple, assets already listed on a decentralized exchange (DEX) should experience abnormal movements compared to those not listed. Indeed, since DEXs are not subject to Know-Your-Customer (KYC) or Anti-money laundering (AML), they are the ideal targets.

This is how the researchers pointed out that for 10 to 25% of the active ingredients observed, abnormal yield levels and movements have been noted. In addition, the price structure on decentralized exchanges just before listing is very similar to known cases of insider trading.

In addition, a certain number of addresses could be identified because they would have traded the majority of the assets concerned by this study. Their behavior is similar, with a pre-listing accumulation and a post-listing unloading. The researchers estimated the earnings from these addresses at $1.5 million.

As a reminder, insider trading is a crime punished by the Securities Exchange Commission (SEC), the American stock market policeman. However, the scope of this kind of study remains very limitedin particular by the ability to prove a real cause and effect link, beyond a simple correlation.

👉 To go further – Insider trading: Coinbase fires offending employee and takes him to court

Source: University of Technology Sydney study

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