Coinbase is again involved in insider trading scandal: involving 10% to 25% of tokens

On August 18, three financial researchers from the University of Technology Sydney in Australia claimed that there may have been insider trading on the Coinbase platform in the past four years, and said that the problem went beyond the case filed by the U.S. Department of Justice in July.

In a paper that has not yet been peer-reviewed, Professor Ester Felez Vinas, Professor Talis Putnins and doctoral student Luke Johnson estimated that between September 2018 and May 2022, 10%-25% of the listed tokens on the Coinbase platform had insider trading problems, involving funds of up to US$1.5 million.

The researchers examined 146 cryptocurrencies listed on Coinbase and tracked the prices of these cryptocurrencies 300 to 100 hours before listing to find abnormal trading patterns of related assets on decentralized exchanges (DEXs). The results showed that there was a significant increase in the prices of related assets about 250 hours before the listing announcement, and the rise continued until the listing announcement was released.

In response, a Coinbase spokesperson said in a statement: “Coinbase takes allegations of front-running very seriously, and we work hard to ensure that all market participants have access to the same information. As part of this work, we have taken steps to minimize the likelihood of technical signals in asset testing and integration steps. We have zero tolerance for illegal behavior, monitor it, and investigate it when appropriate.”

Coincidentally, in July this year, the former manager of the cryptocurrency trading platform Coinbase was arrested for insider trading in the United States. The U.S. Department of Justice stated that former Coinbase manager Ishan Wahi provided information about crypto assets that were about to be listed on Coinbase to his brother and a friend, and therefore charged him. The inside information leaked by Ishan Wahi allowed the other two defendants to trade shortly before at least 14 Coinbase public listing announcements, which involved at least 25 cryptocurrency assets.

Coinbase CEO Brian Armstrong once said that this incident is a wake-up call for Coinbase and the entire crypto space. Insider trading is illegal and will erode your users' trust in you. We will continue to investigate those who misconduct and hand them over to law enforcement, and they will face real legal consequences, including serving a sentence.

Brian Armstrong has not yet responded to the latest accusations.