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Crypto Exchange Coinbase recently revealed a $1 Billion Loss in Q2. Coinbase’s revenue fell more than 64% during quarter-two year-over-year amidst the crypto market meltdown. The retail transactions revenue also decreased by 66%, to presently stand at $616.2 million.
The hurdles for Coinbase just don’t seem to end.
Now, three academics from Sydney Australia: Ester Félez-Viñas, Luke Johnson, and Tālis J. Putniņš, have claimed that Insider trading occurs in 10-25% of cryptocurrency listings in their study paper named “Insider trading in cryptocurrency markets.” Their research report has employed the Cryptocurrency exchange Coinbase for the case study.
Insider Trading Spikes In The Crypto Sector
Insider Trading in the Crypto business has been commonly neglected until recently due to limited regulation.
However, in July, an ex-employee of Coinbase was probed by the U.S. Department of Justice (DOJ) (DOJ). The Coinbase employee, along with his brother and buddy, was charged with wire fraud and insider trading.
The study published by these experts from the University of Technology Sydney takes use of blockchain data to identify perpetrators of insider trading, who have yet to be summoned. They studied all of Coinbase’s listing announcements and processes from September 2018 until May 2022 utilizing an internet archive site.
As a general observation, the researchers noticed that insider trading is more widespread in crypto compared to stock markets. The revenues from such unlawful conduct are projected to be around 1003 ETH ($1.5 million) at all times. Token sales conducted immediately following the listing announcement allow for the achievement of such amounts.
In the article, it is stated that “Our analysis reveals considerable price run-ups prior to official listing announcements, which are comparable to instances of prosecuted insider trading in stock markets.” According to these findings, cryptocurrency markets are prone to the same sorts of wrongdoing that regulators have been struggling with for a long time in traditional financial markets.
In the article that was published by the researchers, it is stated that “Leveraging blockchain data, we identify the exact transactions and wallets (individuals) that routinely trade before announcements, ruling out alternative explanations.” We believe that insider trading takes place in 10–25% of cryptocurrency listings, and we estimate that insiders made a minimum of $1.5 million in trading profits as a result of their activity. Our research has uncovered some cases that have not yet been brought to justice.
Coinbase Is Struggling Right Now
The Q2 statistics for Coinbase showed a loss of more than one billion dollars, which is evidence that the company suffered significant losses during the second quarter. The California-based corporation recently stunned the entire world by suddenly firing 1,100 of its employees, making the continuous troubles evident to everyone on the planet.
According to the reports, Coinbase’s value decreased significantly, going from $462 billion in 2021 to merely $217 billion now. In the second quarter, Coinbase reported a loss of $4.95 per share, which was significantly more than the $2.65 loss that was anticipated. The revenue of the exchange company for the second quarter came in at $808.3 million, which was significantly lower than the $832.2 million that had been anticipated as the revenue.
Coinbase’s quarterly revenue was $1.59 billion during the same period a year ago, but the company still managed to post a net loss of $1.1 billion. At the conclusion of the March quarter, Coinbase’s cryptocurrency assets totaled $1 billion; however, at the end of the June quarter, same assets had decreased to $428 million, representing a drop of 50 percent.
In a letter that it sent to its shareholders, the business explained that the second quarter had been “a test of durability for crypto enterprises and a tough period overall.” The dramatic shifts in the market caused changes in user behavior and trading volume, which in turn had an effect on transaction income, but also highlighted the effectiveness of our risk management program.