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Insider Trading at Coinbase

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Re: Insider Trading at Coinbase

#71

Post by dalbasal »

matwood wrote: post #32
perihelions wrote: post #10

Is this insider trading according to the law? Nonpublic information isn't being used to trade public stocks; it's being used to trade assets that don't appear to be regulated securities.

To add to what you're saying, forex explicitly does not have insider trading rules. The problem is it's treated as a general asset. It feels like there should already be rules in place to handle if, for example, an Amazon exec went and bought property around an area prior to Amazon announcing their new HQ.

Perhaps, though insider trading rules are pretty hard to enforce inside relatively confined and regulated realms.

One solution is to go a step up the meta. Ban trading for certain groups or classes, like banning parliamentarians and government officials. ..but spouses, kids, friends and cousins make for a pretty substantial loophole.

That said, not regulating against insider trading bleeds very quickly into market manipulation and corruption.

Not sure what the ansers are. This is a very dirty part of the game game. Crypto brings in a new set of players, and it takes years before they'll learn to do this in a way that maintains a stable plausible legitimacy.

We absolutely cannot have second tier people insider trading and rigging markets. It's antistabalizing.

Re: Insider Trading at Coinbase

#72

Post by tmsh »

logicchains wrote: post #16
Drakim wrote: post #8

Earlier quoted context omitted.

Modern society would collapse if insider trading was legal. It would about as well as making bribery legal.

That's absurd. Insider trading makes markets more efficient as the information enters the market earlier, allowing them to reach the correct price sooner. There's no insider trading laws in commodities or real estate, have those markets collapsed?

Insider trading delegitimizes markets. It’s illegal for all regulated US commodities trading. It’s called front-running. It in theory would make the market more efficient for that one minute interval where a local trader eg makes trades ahead of a larger institutional order of an honest participant. But by screwing over the honest participant it would misrepresent the true price of the asset. It’s definitely illegal by the CFTC and any exchange that trades anything regulated.

That doesn’t stop people from trying to get away with it under the radar tho (small front-running order ahead of large institutional order). The innovation in crypto is frontrunning at the transaction time is more difficult (trades are encrypted, not made in some open outcry pit).

However this doesn’t stop exchanges from screwing over customers by creating demand and someone inside trading their pre-listed asset.

To prevent that programmatically you’d need a crypto protocol for establishing new listings where everyone is aware of new listings in advance and agrees via some fair consensus.

Re: Insider Trading at Coinbase

#73

Post by 0xdeadb00f »

londons_explore wrote: post #13
vosper wrote: post #6

The big-brain move would be to identify the wallets that must be trading on “insider” info, and copy their trades?

Anyone smart would use a new wallet each time.

These are people who use coinbase (and I assume work for coinbase too) for sketchy crypto trading. Already not the smartest.

Re: Insider Trading at Coinbase

#74

Post by wizardofdos »

pingeroo wrote: post #35

Why is the SEC so slow to regulate cryptoassets? Literally everything that they combatted for stocks and traditional assets is now taking place in the crypto ecosystem.

Because they are a gutted, disempowered US-regulator. Wrecked by 4 years of Trump and countless other presidents before them.

Possibly there is also not the political will to ramp up the regulatory speed and power although I still have hope that Biden will be able to change that at least a bit.

Re: Insider Trading at Coinbase

#75

Post by chaosbolt »

I think Coinbase does fractional banking, I don't have any proof so not completely sure but you can judge yourself, this happened a few months ago:

- nuCypher just randomly started going up on Binance

- the price was still low on coinbase

- the normal thing to do was to withdraw from coinbase and sell on binance

"Oops withdrawal of nucypher is temporarily locked", it stayed locked for 8 hours, all the crypto subs on reddit were screaming about it etc... a normal shitshow.

No explanation whatsoever was given, the only one that makes sense to me is that they do fractional reserve like everyone else, since there is no way everyone is going to withdraw at the same time right? in the 2021 bullrun coinbase received a lot of non technical people who are ok with keeping their funds on their website, so I guess they figured out they could just imitate the banks and start lending the funds people keep there and have you trade imaginary tokens you can't withdraw if you see a better opportunity.

Re: Insider Trading at Coinbase

#77

Post by WHA8m »

matwood wrote: post #32
perihelions wrote: post #10

Is this insider trading according to the law? Nonpublic information isn't being used to trade public stocks; it's being used to trade assets that don't appear to be regulated securities.

To add to what you're saying, forex explicitly does not have insider trading rules. The problem is it's treated as a general asset. It feels like there should already be rules in place to handle if, for example, an Amazon exec went and bought property around an area prior to Amazon announcing their new HQ.

The question is, when is a coincident of making profit too big to actually be true. And I feel like this could be something that AI can be used for in the future. No human can overlook all the possibilities one could profit off insider information.

Re: Insider Trading at Coinbase

#78

Post by sauwan »

chaosbolt wrote: post #75

I think Coinbase does fractional banking, I don't have any proof so not completely sure but you can judge yourself, this happened a few months ago: - nuCypher just randomly started going up on Binance - the price was still low on coinbase - the normal thing to do was to withdraw from coinbase and sell on binance "Oops withdrawal of nucypher is temporarily locked", it stayed locked for 8 hours, all the crypto subs on…

Couldn't this just be that they keep some amount in cold storage that's not super easily accessible?

Re: Insider Trading at Coinbase

#79

Post by rosndo »

tsimionescu wrote: post #41
logicchains wrote: post #16

Earlier quoted context omitted.

That's absurd. Insider trading makes markets more efficient as the information enters the market earlier, allowing them to reach the correct price sooner. There's no insider trading laws in commodities or real estate, have those markets collapsed?

> Insider trading makes markets more efficient as the information enters the market earlier, allowing them to reach the correct price sooner. How exactly do you think this happens? If I know that a stock is about to rise significantly, I can just buy it at the current price all the way up to the day the information becomes public, and I will not have changed its price at all, but will profit massively off of my insid…

> and I will not have changed its price at all

Of course you will have, buying affects the price.

Re: Insider Trading at Coinbase

#80

Post by RandomLensman »

tsimionescu wrote: post #29
logicchains wrote: post #14

Earlier quoted context omitted.

Economically speaking insider trading represents a net positive for the market as it brings information onto the market sooner, allows it to reach a better price sooner. The only people hurt by insider trading are those to whom the person doing insider trading has a fiduciary duty, which for a Coinbase employee would be Coinbase itself. Other markets like commodities and real estate have gotten along perfectly fine w…

> Economically speaking insider trading represents a net positive for the market as it brings information onto the market sooner, allows it to reach a better price sooner. No, economically speaking insider trading just hurts the market, as all free market models work only in so far as all actors have equal access to information. Unequal information makes the market less efficient. Hidden information that is not used…

> No, economically speaking insider trading just hurts the market

I think that at least needs a qualification around what is meant by "hurt". If you were to look at the speed with which information might enter the market, insider trading restrictions might slow things down, for example. Not arguing for insider trading here, but the academic discussion - as I recall it - was/is a bit more nuanced.

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