A study conducted by analysts at the University of Technology Sydney (UTS) discovered some insider trading activities associated with cryptocurrency listings on the Coinbase exchange. According to the study, this illegal activity occurred in 10-25% of cryptocurrency exchange listings, and as a “lower bound, insiders earned $1.5 million in trading profits.”
At the beginning of their research, the paper discloses that the analysts sought out the “most active (highest volume) wallets that trade on DEXs each hour” before making a coin listing. The analysts removed the trading volumes linked to the Maximal Extractable Value (MEV) bots.
This gave the researchers access to a pool of potential insider traders, which they cross-referenced with data from addresses that frequently carried out trades before a listing announcement.
Four wallets were singled out, and the study claims that they frequently initiated transactions before coin listings on Coinbase. One of the wallets, according to the study, “Wallet 3 accumulated the coins GTC, MLN, KEEP, and SUKU prior to their listing announcements. Instead of selling on DEXs, the wallet (individual) transferred the tokens to Binance, where they could be sold following the Coinbase listing announcement. ”
The analysts believe their research is validated by the US Securities and Exchange Commission’s recent decision to investigate a former Coinbase employee for insider trading while still employed by the exchange.
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