10% to 25% of Crypto Listings Victim to Insider Trading

A recent study shows abnormally high levels of returns in newly listed tokens on Coinbase.

10% to 25% of Crypto Listings Victim to Insider Trading

The University of Technology Sydney has conducted a study showing that 10% to 25% of new listings have been subjected to insider trading, SSRN confirms. The study was taking place between September 25, 2018, and May 1, 2022, accounting for almost four years of data and tracking 146 listings.

It was estimated that tokens available on decentralized exchanges (DEXs) before their listings would show disproportionately higher returns if insider trading were at play. A small number of wallet addresses were believed to have a large number of assets shortly after they were launched by Coinbase.

At the moment, the status of the study is still in its draft stage. Only after it gets reviewed by other respected peers could the results be considered official. This might also prove difficult due to a rather difficult job of proving causality based on correlation.

The study suggests that traders with private information are one of the reasons for the abnormal increase. Despite the former Coinbase executive being charged by the U.S. Department of Justice for insider trading and pleading not guilty, the study does not seem to be helping their case.

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