Researchers at the University of Technology in Sydney claim that 10 to 25% of Coinbase listings over the past four years have been accompanied by insider trading.
In the article “Insider Trading in the Cryptocurrency Markets”, Prof. Ester Felez Vinas, Prof. Talis Putnins, and Ph.D. Luke Johnson state that insider trading occurred in 10-25% of cryptocurrency listings on the exchange. Coinbase between September 2018 and May 2022.
The authors of the article claim that this led to at least $1.5 million in fraudulent profits. The researchers studied 146 Coinbase listings and tracked their prices 300-100 hours before each new listing appeared on the exchange.
“We found out that before the listing announcement, there is an obvious overclocking pattern starting from 250 hours. Preparations continue until the listing is announced, where we see a price spike due to new information coming into the market and the reactions of traders to the news. The growth pattern we are seeing is consistent with spikes in insider trading lawsuits in equity markets,” the researchers write.
They also said that increased insider trading could deter potential investors and hinder the adoption of secure presentations of securities and other financial instruments.
Earlier, the CEO of Ark Investment Management, Cathie Wood, said that the harassment of the Coinbase exchange by the regulator forced the fund to reduce the volume of shares of the trading platform.