In January this year, a buddy of a former Coinbase product manager was sentenced to October imprisonment for colluding with telecom network fraud, which the investigators said was also the first insider trading case involving cryptocurrencies. In September 2022, Nikhil Wahi surrendered to a transaction based on private data obtained from his buddy Ethan Wasi, a former Coinbase product operator.

Most of our country has laws prohibiting insider trading, and insider trading will also be severely punished, such as imprisonment and high fines. The recent insider trading investigation conducted by the Securities and Exchange Federation on the password exchange shows that regulators are prepared in advance to prevent financial misconduct in the login password market.

In the absence of clear control, many people wonder whether there are similar rogue employees involved in illegal trading in other exchanges.

In the lawsuit mentioned in October 2022, the investigators filed a similar complaint against a management of OpenSea. After the collapse of FTX and the alleged misconduct of management, anxiety is growing.

A few weeks after the first insider trading conviction, the confusion of tokens related to the Binance sale became a hot topic. McGregor Grogan, executive director of Coinbase, reported on Twitter that you should pay attention to a number of recent trading-themed events in secret wallets. It is reported that the unidentified wallet bought a number of unlisted tokens a few minutes before the Binance announcement and sold them immediately after the announcement.

The wallet has gradually earned hundreds of thousands of dollars from the soaring price of the new tokens listed on Binance. The accuracy of the deal shows that wallet users can get intimate information about such listing information. According to Grogan, this should be a rogue employee associated with the selling elite team who understands the information of a new property announcement, or a trader sees some kind of API or periodic / detection trade leak.

Binance recently unveiled a 90-day representative sales program for key members of companies and employees' families to crack down on insider trading. The policy strictly prohibits the sale of all newly listed tokens in the essential exchange market during the relevant period of time. A spokesman for the password Exchange told the Cointelegraph that the exchange adopted a zero-tolerance policy for any employee who used inside information to profiteer and adhered to strict ethical principles related to any behavior that was likely to harm customers or individuals in the industry.

At Binance, we have an industry-leading elite team of cyber information security and digital research, made up of more than 120 former inspectors and their security and intelligence experts who investigate external and internal misconduct. There is a long process, including internal networks, that our own security team follows to investigate and hold accountable those who engage in this practice. "the spokesman said.

What is the difference between login password insider trading and traditional market

Blockchain is a public, immutable database that holds all the transaction history of cryptocurrencies. Although the digital currency wallet hides the true identity of the trader, the openness and clarity of the block chain enables researchers to obtain accurate transaction data information to detect crimes and misconduct.

Ruadhan O, the chief developer of OTP software, told Cointelegraph that insider trading in login passwords would not occur like the stock market. As far as individual stocks are concerned, insiders are those who are not publicly aware of the news that the product is about to be released, which will affect the performance of the company.

Such people are company employees, due process and decision makers, he adds. In the case of encrypted currencies, exchange operators still have the opportunity to occupy very large transactions and manipulate share prices. In both cases, insider trading deceives responsible investors in an unnoticeable way. He explained how the exchange works with existing policies to ensure fair and just price discovery:

"Foreign countries can implement strict regulations, stipulating that the encrypted currency order information transmitted will be solved by the public order information matching system, which will avoid advance. This will help create a security system software for cryptocurrency investors in the United States, but it will facilitate most offshore accounts for cryptocurrency transactions. Insider trading on larger exchanges must be completely blocked in harmony internationally, and a government with healthy competition is unlikely to agree on ways to harm the country's social economy.

According to a study by the Law Department of Columbia University, a group of four interrelated wallets often buy cryptocurrencies a few hours before the official announcement, resulting in a profit of $1.5 million. Before starting the listing announcement, the identified wallet bought the affected tokens and temporarily suspended trading after the sale of the trading position. Research shows that the trading history of the digital currency wallet is accurate, indicating that users can get private information about the cryptocurrency they intend to list on the exchange.

Research shows that the cryptocurrency enumerated in the sample contains 10% Murray and 25% related to insider trading at the time of the listing announcement.

According to this study, there is a major insider trading problem in the cryptocurrency market, which is more serious than the ordinary stock market. Statistics also show that there are obvious abnormal returns and increases before the listing announcement. This trading model is similar to that recorded in the case of insider trading in the stock market.

Jeremy Epstein, chief marketing officer of the first-tier agreement Radix, told Cointelegraph that access to password exchanges is no different from traditional financial investment companies trading in this market and should be subject to similar strict regulation. He explained:

This new scandal once again highlights how excellent a transparent, decentralized financial management system is for consumers and investors, and he will no longer have to fear blackmail by insiders. Insider trading is not easy to fade, but it can be detected more easily and more effectively, saving millions of dollars for victims.

Insider trading is a well-known situation in the general financial system, that is, some people conduct illegal transactions based on access to trade secret information in order to gain their own interests. The trend of insider trading in traditional markets is usually not confined to the former employees of an exchange. Many incumbent politicians and policy makers have been found to be involved in this kind of personal behavior. According to a study by the New York Times, at least 97 serving members of the House of Representatives bought and sold individual stocks, bonds or other financial assets related to their work as legislators, or published similar thematic activities undertaken by their partners as a result of their dependent children.

Another prominent case is the insider trading scandal in the US Congress in 2020, in which lawmakers violated securities laws by using information obtained from a personal meeting of the House of Lords to sell shares at the beginning of COVID-19 's epidemic. On March 30, 2020, the U.S. Department of Justice investigated such stock trading. All the investigations have been completed and no one has ever been charged.

The high-profile case of traditional market insider trading highlights that while all measures and regulations have been issued, policy makers responsible for safeguarding the rights and interests of investors are said to be involved in the same theme.

Policies and regulations alone cannot solve some of the original key problems. Wade Adoino, Bitfinex's technical director, believes that login passwords should not be the overall target of the attack.

Ardoino told Cointelegraph that there was an opportunity for misuse in young areas such as data encryption until there were clear rules and basic guidelines to prevent such misuse. He said, be sure to protect against irregular information liquidity, so that you can really complete the price discovery. He explained:

"I think the password exchange and policy makers should work together to create a regulatory framework so that the field can develop rapidly, while protecting all participants from the misuse of the sales market. As a cryptocurrency exchange at the forefront of technological innovation in digital dynamic password trading, Bitfinex's key overall goal has always been to provide a secure and transparent natural environment for traders. We will continue to carry forward the fighting spirit.

With the increasing attention of regulation and control after the collapse of FTX, logging in to the password exchange has taken additional precautions to track and ensure fair and fair transactions and better protect customers.