- According to a study by three UST researchers, there may be more insider trading cases at Coinbase.
- The study examined the performance of the tokens 300 hours before Coinbase’s announcements and 100 hours after.
Researchers at the University of Technology Sydney revealed in a study that the Coinbase insider trading may be wider than the current case in the US. The SEC charged the exchange’s former product manager, Ishan Wahi, and two other individuals for insider trading. According to the watchdog, the former executive and the other two colluded to profit from the list of new tokens on the platform before they were officially released.
However, Wahi pleaded not guilty to the insider trading accusation while working at Coinbase. Meanwhile, the US Department of Justice (DOJ) indicted the former product manager for wire fraud on the 21st of July in New York. The DOJ said Wahi conspired to commit wire fraud in connection with an insider trading scheme. The ex-employee, along with his brother Nikhil was arrested for the crime. The Justice Department noted that Wahi “violated his duties of trust and confidence to Coinbase.”
According to an SEC filing, Wahi leaked listing announcements in advance to his brother and his brother’s friend Sameer Ramani. The former product manager was said to share details of 14 Coinbase listing announcements of more than 25 digital currencies. Nikhil and Ramani used the information to trade cryptos before announcements went live. According to the filing, the duo made more than $1.1 million in profits.
UST researchers release a new study on Coinbase insider trading
In their study on Coinbase insider trading, the researchers observed the trading of tokens on decentralized exchanges ahead of Coinbase’s announcement to list the same tokens. Luke Johnson, Ester Felez-Vinas, and Talis J. Putnins examined the tokens’ performance 300 hours before Coinbase announced plans to onboard them. Hypothetically, insider trading can be done easily on platforms like Uniswap, where there is no requirement for identity checks.
Furthermore, the authors took a look into the time when the price surge was linked to insider trading. They considered the number a token increased in associated with an insider using it based on prior knowledge of an upcoming listing. The study result shows that coins that traded on decentralized exchanges spiked 40 percent on average. That is in comparison to the benchmark during the 300 hours before Coinbase’s announcements. In addition, these digital assets added another 2 percent vote the subsequent 100 hours. According to Putnins, the 300-hour window was used in the study based on observation of insider trading on the blockchain. He added:
This is an environment where you’re likely to find financial crimes and misconduct. Here we have a unique data set – the blockchain – which we don’t have in the stock market that allows us to get more direct evidence.
Basically, the study indicates that the current charge may not be the only instance of insider trading within Coinbase.
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