The recently published research paper by researchers from the University of Technology in Sydney, Australia, claims there is systematic insider trading in the crypto industry. The paper allegedly claims that the leading crypto exchange Coinbase’s total listing in the last four years holds up 10-25% insider trading.
Three researchers, Professor Ester Felez Vinas, Professor Talis Putnins, and Ph.D. candidate Luke Johnson have conducted this research on the crypto industry.
In April 2022, After finding suspicious activity by a Coinbase employee, the Security and Exchange Commission filed a complaint against him and others linked to this matter.
However, the Department of Justice recently pleaded not guilty to him on the charges of insider trading.
The study claims to identify cases of Insider trading in the cryptocurrency market and profits gained by insiders on them which are unknown to the SEC.
Researchers have collected data from Coinbase listing announcements from September 25, 2018 to May 1, 2022, which contains 170 samples of listing announcements.
On the basis of various data resources, researchers found that around 10-25% of cryptocurrency listings account for insider trading. Also, lawbreakers have earned $1.5 million from insider trading.
Researchers have assessed the Likely Insider Trading Group (LTIG) tokens’ prices 300 hours before the listing and 100 hours after the listing to find out any abnormal trading patterns in Coinbase. In this assessment, they found a constant “run-up” pattern before listing that increased LTIG’s price.
“Like other forms of financial misconduct, insider trading is detrimental to the integrity of cryptocurrency markets and its presence may harm investor confidence,” the research concluded.