JAKARTA – Cases of trading carried out by insiders or insider trading from crypto exchanges are increasingly widespread. A study conducted by financial researchers from the University of Technology, Sydney, Australia, reveals the practice of insider trading on the Coinbase crypto exchange.
Previously, a former Coinbase product manager had been arrested by the authorities on suspicion of sharing information with his relatives regarding a new digital asset to be traded on Coinbase.
According to a CoinCodeCap report, earlier this month, the former employee and his brother pleaded not guilty to charges of fraud in what is thought to be the first insider trading case involving cryptocurrency.
Recent research has uncovered the timing of insider trading practices. They explained that insider trading had occurred in 2018 until this year.
According to three financial researchers at the University of Technology, insider trading occurred in 10-25% of Coinbase's listings between September 2018 and May 2022. They added that insider trading resulted in at least US$1.5 million in illicit trading profits.
In the report entitled “Insider Trading in the Cryptocurrency Market,” Professor Ester Felez Vinas, Professor Talis Putnins, and Ph.D. candidate Luke Johnson claims that the practice of insider trading is already “systemic” in the cryptocurrency industry.
As part of the research, academics examined 146 Coinbase listings and tracked token price movements between 300 hours before the Coinbase listing announcement and 100 hours after the announcement. They next look for abnormal token trading patterns on decentralized exchanges.
“Hourly price and volume data is collected for all exchanges, both centralized and decentralized, listing tokens 480 hours (20 days) prior to the Coinbase listing announcement. Centralized exchange data sourced from CryptoCompare and decentralized exchange data (DEX) from The Graph,” the report reads.
The researchers further claim that they witnessed a clear upward pattern before the announcement of the starting list -250 hours.
“The journey continues until the listing announcement event, where we see price spikes as new information enters the market and traders react to the news,” the researchers added.
Reports of insider trading cases don't just hit Coinbase. One of the most popular NFT marketplaces OpenSea is also facing the same allegations.
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