Coinbase (COIN) Insider Trading Problem Bigger Than It Seems, Study Says
The issue of insider trading Coinbase Global Inc. PIECE OF MONEY is larger than initially perceived, according to a new academic study.
What happened: In a peer-reviewed paper titled “Insider Trading in Cryptocurrency Markets,” researchers from the University of Technology Sydney found that 10% to 25% of new token listings on Coinbase were led by insiders.
These insiders made $1.5 million in trading profits after the tokens were listed on the crypto exchange, according to the study.
“Our analysis shows significant price increases ahead of official listing announcements, similar to prosecuted cases of insider trading in stock markets,” said Ester Felez-Vinas,Luke Johnson and Tālis J. Putniņš.
“These findings indicate that cryptocurrency markets are susceptible to the same forms of misconduct that regulators have long faced in traditional financial markets.”
Last month, the US Department of Justice arrested Ichan Wahia former Coinbase product manager and two of his associates on charges of insider trading of crypto tokens on Coinbase.
Following the arrests, the CEO of Coinbase Brian Armstrong said the crypto exchange is “already investigating” insider trading on its platform. Armstrong claimed that it was Coinbase that identified the suspects accused of listing tokens first and passed the information to law enforcement.
See also: HOW DOES COINBASE MAKE MONEY?
Price Action: Coinbase shares traded up 0.070% after hours, according to data from Benzinga Pro.
The crypto market was down 2.4% to $1.12 trillion in the past 24 hours. Bitcoin BTC/USD was trading at $23,454, down 2.3% and Ethereum ETH/USD was trading at $1,854, down 1.8% over the same period.