The insider trading issue at Coinbase Global Inc COIN is bigger than what was originally perceived, a new academic study has suggested.
What Happened: In a yet-to-be peer reviewed paper titled “Insider Trading in Cryptocurrency Markets,” researchers at University of Technology Sydney found that 10% to 25% of new token listings on Coinbase were front-run by insiders.
These insiders earned $1.5 million in trading profits after the tokens were listed on the crypto exchange, the study found.
“Our analysis shows significant price run-ups before official listing announcements, similar to prosecuted cases of insider trading in stock markets,” said Ester Félez-Viñas,Luke Johnson and Tālis J. Putniņš.
“These findings point to cryptocurrency markets being susceptible to the same forms of misconduct that regulators have for a long time grappled with in traditional financial markets.”
Last month, the U.S. Department of Justice arrested Ishan Wahi, a former Coinbase product manager and two of his associates on insider trading charges of crypto tokens on Coinbase.
Following the arrests, Coinbase CEO Brian Armstrong said that the crypto exchange was “already investigating” insider trading on its platform. Armstrong claimed that it was Coinbase that identified the suspects accused of front-running token listings and handed over the information to the law enforcement.
See Also: HOW DOES COINBASE MAKE MONEY?
Price Action: Coinbase shares traded 0.070% higher after hours, as per data from Benzinga Pro.
The crypto market saw a 2.4% decline to $1.12 trillion over the last 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.