Crypto’s Insider Problem: 56% of ERC-20 Token Listings Since 2021 Show Signs of Insider Trading

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51 “serial insiders” have used decentralized exchanges to buy and then sell soon-to-be-listed cryptocurrencies on two or more occasions, with certain serial insiders trading against more than 25 distinct listings apiece.

Metadata
Provider: 
Business Wire, Inc.Business Wire, Inc.
Retrieved on: 
Wednesday, June 28, 2023
Information
Tags: 
Banking, Professional Services, Fintech, Technology, Digital Cash Management, Digital Assets, Public Relations, Investor Relations, Cryptocurrency, Legal, Marketing, NFT, Communications, Finance, Crypto, DEX, Decentralized finance, CXO, HALO
Geotags: 
NEW YORK, UNITED STATES, FRANCE, SINGAPORE, NORTH AMERICA, ASIA PACIFIC, EUROPE
Organisation: 
SOLIDUS LABS
Summary
Key Points: 
  • 51 “serial insiders” have used decentralized exchanges to buy and then sell soon-to-be-listed cryptocurrencies on two or more occasions, with certain serial insiders trading against more than 25 distinct listings apiece.
  • Of the 234 ERC-20 token listings announced by the centralized exchanges examined in the report since January 2021, 131 have shown signs of insider activity, in some cases netting individuals over $200,000 in profits within minutes.
  • “Our study affirms that DEX-based insider trading is a major market integrity problem — but one with a clear solution,” says Chen Arad, CXO and co-founder of Solidus Labs.
  • “The permanent, public, and traceable nature of blockchains means that we can detect and deter this phenomenon with unprecedented transparency.


In a new study, Solidus Labs, a category-definer for crypto and DeFi-native market surveillance and risk monitoring, has found that insider trading in crypto is far more prevalent than previously reported. Data from Solidus HALO’s DEX-based insider trading detection tool shows evidence that insiders have traded against more than half of all ERC-20 token listing announcements on major centralized exchanges since 2021.1

In total, Solidus has identified more than 100 entities – individual cryptocurrency wallets, or groups of connected wallets – that have executed over 400 suspected insider trades since January 2021.

51 “serial insiders” have used decentralized exchanges to buy and then sell soon-to-be-listed cryptocurrencies on two or more occasions, with certain serial insiders trading against more than 25 distinct listings apiece. Of the 234 ERC-20 token listings announced by the centralized exchanges examined in the report since January 2021, 131 have shown signs of insider activity, in some cases netting individuals over $200,000 in profits within minutes.

The report - which is the first part of Solidus’ Crypto Market Manipulation Report Series - provides extensive data on the challenge of crypto insider trading, with case studies and walkthroughs of the methods used by crypto insiders.

“Our study affirms that DEX-based insider trading is a major market integrity problem — but one with a clear solution,” says Chen Arad, CXO and co-founder of Solidus Labs. “The permanent, public, and traceable nature of blockchains means that we can detect and deter this phenomenon with unprecedented transparency. With this technology, we can help regulators and exchanges enable safe crypto trading.”

DEX-Based Insider Trading Detection is the newest addition to Solidus HALO, the firm’s suite of crypto-native market integrity solutions currently in use by regulators, crypto and DeFi platforms and financial institutions worldwide. HALO monitors more than 1 trillion events per day across more than 150 markets, protecting over 25 million retail and institutional entities.

About Solidus Labs

Solidus Labs is the category-definer for crypto-native market integrity solutions - trade surveillance, transaction monitoring, and threat intelligence. Our mission is to enable safe crypto trading throughout the investment journey across all centralized and DeFi markets. As the founder of industry-leading initiatives like the Crypto Market Integrity Coalition and DACOM Summit, Solidus is deeply committed to ushering in the financial markets of tomorrow. Crypto exchanges, financial institutions and regulators globally rely on Solidus HALO - our real-time, comprehensive, testable, and future-proof platform. Safeguarding their business from known forms of market abuse and a plethora of emerging crypto-specific risks, we enable our clients to grow faster - and safer. To learn more, please visit https://soliduslabs.com.

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1 The analysis excluded listings of wrapped tokens and stablecoins.

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