Insider Trading Is Found in 10%-25% of Cryptocurrency Listings

A study by the University of Technology Sydney says insider trading occurs in 10%-25% of cryptocurrency listings.

Researchers selected 146 token listings on cryptocurrency exchange Coinbase between 25 September 2018 and 1 May 2022, and then they examined the price movements of the selected tokens over a timeframe ranging from 300 hours before the listing announcement on Coinbase to 100 hours after the announcement on various exchanges.

According to the researchers, tokens that were available for trading on decentralised exchanges (DEXs) prior to the listing announcement will receive abnormal returns than those that are not on them.

Researchers noticed that price patterns on DEXs prior to Coinbase's listing were similar to the "run-ups" seen in known cases of insider stock trading.

In addition, the researchers note that a small subset of wallet addresses on DEXs were actively hoarding and then quickly selling tokens after the Coinbase listing went live.

The study is currently still in draft status, awaiting review.