23 ms·

Insider Trading at Coinbase

477 points by Shadonototra 5y ago

deleted 5y ago
[deleted]
CyanDeparture 5y ago
This is going to sound naive, but I've zero idea how to draw my coins out of Coinbase and put them on my Mac / memory stick. I can't seem to find any legitimate source of info on how to do it.
pearjuice 5y ago
Why wouldn't they? The risk of getting caught is virtually zero if you do it right and even if you get caught you get a slap on the wrist and a fine at best. It's just pathetic that for a company which so hard tries to legitimize crypto they have issues like this over and over again. The inherent nature of a "get rich quick" ecosystem where the incentives to pull all kinds of shady and illegal actions are too high and the repercussions are basically non-existent.
- Drakim 5y ago
  In the world of cryptocurrency, even the wrist slap isn't a given. To me, cryptocurrency has been a very cool social experiment in what pure unregulated free market capitalism would work like in practice. Supposedly in place of regulations, companies would live on reputation and trustworthy business practices. If you use poisonous lead in your soup cans, people will stop buying your soup when word gets out, no need to regulate, companies will self-regulate to stay profitable and relevant. Reputation and trust is probably the most important thing Coinbase can hoard, it's the one way a legitimate company that acts like an exchange and/or bank for cryptocurrency can use to rise above all the scams and dubious services that's going on in the cryptocurrency world. And yet here they are pissing it down the drain for easy short-term profits. Surprise surprise. The truth is, trust, reputation and even human lives are just input values in the big equation of profits. The free market will always optimize for the best option, even if that option is an overall net loss for humanity.
  - beaconstudios 5y ago
    The experiment wasn't even necessary - the Gilded Age was a libertarian's paradise with the gold standard and very little government regulation. What do we most associate with this era? Robber barons, utility monopolies screwing people over with ruthless business practices, confidence men and literal snake oil quack medicine. I genuinely can't think of a good (ie moral) reason to support the idea given how it is predicted to, and has been shown to, play out.
    - logicchains 5y ago
      >The experiment wasn't even necessary - the Gilded Age was a libertarian'paradise with the gold standard and very little government regulation. What do we most associate with this era? Robber barons, utility monopolies screwing people over with ruthless business practices, confidence men and literal snake oil quack medicine. The rate of economic growth and improvement in people's living standards was much higher back then than it is now. Similarly the average adult back then was much healthier than the average adult nowadays, who is likely overweight or obese with some chronic illness. In spite of the vast amount of pills modern people take. So healthcare hasn't necessarily improved much either.
      - soco 5y ago
        I don't know what the Gilded Age was (and too lazy to search) but, I quote "Over the past 160 years, life expectancy (from birth) in the United States has risen from 39.4 years in 1860, to 78.9 years in 2020"[1] so please do show some support for the affirmation "the average adult back then was much healthier". Unless you mean they all died healthy around 40 years of age - as in, they were totally healthy until 40 then the first illness killed them clean. [1]https://www.statista.com/statistics/1040079/life-expectancy-united-states-all-time/ https://www.statista.com/statistics/1040079/life-expectancy-...
        tsimionescu 5y ago
        While your point is absolutely true, note that life expectancy shouldn't be taken as the literal age most people die. It is the expected value of your age at death. Just like the expected value of a coin flip being heads is 0.5, but no coin is ever 0.5 heads. Life expectancy at birth in the times before modern medicine has always been dragged down significantly by the huge rate of infant mortality. It was more common for a family to have 1-2 dead small children in their past than not. People who lived past 5 or 10 or so would often live to see 70 or so, and 80 or 90 year olds were not unheard of.
- logicchains 5y ago
  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 without any insider trading laws.
  - lexapro 5y ago
    Anyone that loses money they wouldn't have lost otherwise is hurt by insider trading. And if you make it legal, people will try anything to gain insider information.
  - lvl102 5y ago
    None of this is true. Don’t compare some shitcoin with nonexistent liquidity to real-world commodities.
    - cuteboy19 5y ago
      There is no economic utility in this system to begin with. So even if this were true, they would be optimising a quantity that would eventually be multiplied by 0 anyways.
  - tsimionescu 5y ago
    > 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 in trades doesn't affect market efficiency, as all actors get a chance to decide a new price once the information becomes public. > 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. No, the people most hurt by insider trading are the cpunter-parties to those trades, who are acting on inferior information. It is a type of fraud - I'm acting as if the publicly known information is up to date, but in fact I know something the rest of the market doesn't about the value of the good I'm trading. It's like selling beans that have been publicly shown to be magical, while I happen to know the public show was staged and they are in fact normal beans.
whywhywhywhy 5y ago
Insider trading should just be legal and fine. I mean politicians do it every day so I don’t see why normal people shouldn’t be allowed to. Or make it actually illegal not just “legal if you have enough resources”
- banachtarski 5y ago
  This is a hilariously misinformed take, indicative of reading news in a bubble. The cryptosphere benefits when folks like you don your tin foil hats. You do realize the amount of scrutiny is far greater, affects all individuals above a certain pay grade at publicly traded companies, and that regulation continuously evolves? Protections against wash and insider trades are an important consumer protection but crypto advocates would rather you believe the current system doesn’t offer those affordances than admit deficiencies in their blockchain based ecosystems
  - logicchains 5y ago
    Insider trading laws, to the extent they work, make the market less efficient because they delay the entry of information into the market. The majority of markets outside of equities, like real estate, don't have insider trading laws yet have managed perfectly fine.
    - tsimionescu 5y ago
      The real estate market requires sellers to disclose property risks to potential sellers, which is an alternative to insider trading laws (one that would scale poorly to stock trading). Similarly, commodities are often sold under a warranty, with any hidden flaws being the responsibility of the seller - another solution to the problem of unequal information.
- Drakim 5y ago
  Modern society would collapse if insider trading was legal. It would about as well as making bribery legal.
rvz 5y ago
Unsurprising as I said before [0], after what happened with OpenSea [1], Internet Computer [2] and now ApeCoin [3], you get this. This is how they pump and dump on retail over again. Rinse and repeat. [0] https://news.ycombinator.com/item?id=30725449 https://news.ycombinator.com/item?id=30725449 [1] https://www.cnbc.com/2021/09/15/opensea-insider-trading-rumors-are-true.html https://www.cnbc.com/2021/09/15/opensea-insider-trading-rumo... [2] https://startupsandecon.substack.com/p/you-dont-own-web3-a-coinbase-curse https://startupsandecon.substack.com/p/you-dont-own-web3-a-c... [3] https://www.financemagnates.com/cryptocurrency/apecoin-by-yuga-labs-is-launching-today-listed-at-the-top-crypto-exchanges/ https://www.financemagnates.com/cryptocurrency/apecoin-by-yu...
- beaconstudios 5y ago
  I honestly think you'd be hard pressed to find a crypto business that isn't rooted in some kind of scam, greater fool scheme, pyramid scheme, or the like. The whole industry is a mess.
  - elefanten 5y ago
    And you think this on what basis? Engagement with the space, or your emotional knee jerk reactions to the occasional headline you read? This comment comes across utterly unserious.
    - beaconstudios 5y ago
      Based on both my observations of the space and interaction with crypto people and the crypto market. I know people who work in crypto too. Your defensive kneejerk reaction doesn't serve as an opposing argument - if you think differently, all you need to do is provide some evidence.
      - carmen_sandiego 5y ago
        I mean, most legit exchanges are not 'rooted' in scams, even if some of their employees take advantage. The only way you could say Coinbase were 'rooted' in that is to assume your premise: that crypto itself is a scam.
vosper 5y ago
The big-brain move would be to identify the wallets that must be trading on “insider” info, and copy their trades?
- londons_explore 5y ago
  Anyone smart would use a new wallet each time.
  - ianpurton 5y ago
    Not necessarily. If people buy after you trade then the value of your wallet goes up.
    - mousetree 5y ago
      Could you explain further. I'm not sure I understand how this relates to the parent comment?
      - drexlspivey 5y ago
        It’s in their interest if other people copy their trades because the asset values will go up
      - ButchC 5y ago
        Imagine you you had a magic button that suddenly increased demand for a volatile security any time you pressed it. That would be a fairly valuable thing for some people.
      - lbotos 5y ago
        If I have information that the price of x coin is going to go up and my friend knows I know, then they just need to follow my trades and they can make money too. If enough people follow my trades then this can generate demand and actually affect the price.
  - 0xdeadb00f 5y ago
perihelions 5y ago
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.
- anm89 5y ago
  This was my question as well. Id assume its a grey area and that the sec could come after them if they wanted. Whether they would win is anorher story
- soco 5y ago
  It's not illegal but that's the very reason why some things got regulated in the first place.
- matwood 5y ago
  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.
  - jchonphoenix 5y ago
    Insider trading on real estate is explicitly allowed by law.
  - pardon_me 5y ago
    The world seems to run on "favors" of insider knowledge like this.
  - dalbasal 5y ago
    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.
Steele69 5y ago
pingeroo 5y ago
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.
- unnouinceput 5y ago
  Because SEC is something specific to US and crypto is international perhaps? I doubt SEC has anything to say in this regard when the trading happens to belong to a citizen of China, for example. And while I do know Coinbase is US firm, so is AMEX. Insider trading at AMEX in regard to foreign citizens isn't something they can do anything about it, can they?
  - hestefisk 5y ago
    The exchange is still physically registered in the US, similar to how non US citizens can place trades on NYSE etc. This cowboy market is madness and irresponsible.
    - valzam 5y ago
      But the crux is that those trades didn't occur on Coinbase, the assets hadn't even been listed yet. So it might very well be a case of a non-us citizen trading on a non-us exchange (or defi exchange). What can the SEC do in this case?
  - wdb 5y ago
    But wouldn't US laws apply when it is an American company or trade in the US?
    - unnouinceput 5y ago
      Yes it does, hence why I gave both of them as examples above. Just take a look at AMEX history in regards to insider trading and foreign citizens, then tell me what SEC did in those cases. Coinbase is just the latest kid in the finance sector, with just a fraction of toys AMEX has palying with for decades already. Let me put it this way. Coinbase is just a sliver of what money AMEX is trading and is used as dust in eyes to blind people at real insider trading that happens in real money makers, which are AMEX and the rest of well established banks. Good luck SEC doing anything about it.
chaosbolt 5y ago
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.
- sauwan 5y ago
  Couldn't this just be that they keep some amount in cold storage that's not super easily accessible?
  - KingOfCoders 5y ago
    8h? Iceage storage.
    - dannyw 5y ago
      It is entirely reasonable to use hardware security modules that enforce timelocks for signing.
      - vermilingua 5y ago
        If it were entirely reasonable they probably would have disclosed that as the reason.
  - snarf21 5y ago
    They're an exchange. Cold Storage is not their job. It isn't much of an exchange if I have to wait 8 hours to put in a sell order.
SkipperCat 5y ago
I just consider Coinbase and it ilk as "safe" places for cryptocurrency. I don't think of them as ethical in the same way I'd think of an account at TDAmeritrade, Schwab, etc. Traditional brokerage houses have regulations forcing them to play fair, and reporting structures to enforce it. Crypto exchanges are trying to convince the world they are a more secure place for your coins. Better IT security and highly funded enough to probably make good on any hacks. The synergy is they want to keep me safe so they can keep their reputation (and their reputation gives them more business). Is that a fair deal? That's for each of us to decide. Keep your coins where you wish.
- chrsw 5y ago
  Their name is their name?
- TheColorYellow 5y ago
  I appreciate your sentiment, but I want to point out that your belief that "Traditional brokerage houses have regulations forcing them to play fair" and believing that there are adequate "reporting structures to enforce it" is a great example of the moral hazard that exists in the market today. I agree that law and regulation plays an important role in the market, but as the market has advanced and become increasingly more complex than previous models, I do not believe Law and regulation has kept up. The GME fiasco and the resulting litigation is a good example of these problems. And before anyone says this is proof the rules in place work - I'd like to point out that our online brokerage infrastructure and market structure has been around since the early 2000's. It's quite difficult to say what has not been surfaced and recognized. And no, despite the nature of the trade itself, no one should discredit the lawsuit as illegitimate. https://www.thinkadvisor.com/2021/01/29/gamestop-lawsuits-hit-schwab-td-ameritrade-interactive-brokers/ https://www.thinkadvisor.com/2021/01/29/gamestop-lawsuits-hi... The absurdity and extreme nature of the GME case shows tells me that there are outstanding issues throughout this value chain. And the belief that our system of rules adequately handles this just because the rules exist is a strong indicator of the moral hazard that prevades our market culture.
  - SkipperCat 5y ago
5350-uiop-1130 5y ago
probably an employee or contact of an employee. frankly coinbase themselves are known to accumulate vast acoumts of a cryptocurrency before listing, so its not like they would have a reason to do this in such convoluted way.
lawrenceyan 5y ago
If you're jaded by web3, just imagine how people back in the day must have viewed web2. Now take a look at the the top 10 companies listed on the S&P 500.
- Traster 5y ago
  This is literally the scam of Web3. Just because you name something Web3 doesn't mean it's going to become the next big thing. There is no relationship between the success of Web2 and what will happen with Web3. Do you know how I know that? Because Web3 was coined by Sir Tim Berners Lee in 2006 as the semantic web and it didn't go anywhere. "Oh well, you see web3 is like web2 + 1 and we know web1+1 was great so web2+1 must be even better". It's an idiots logic.
  - lawrenceyan 5y ago
    Feel free to call them whatever you want. They're just words meant to abstract a concept / zeitgeist. If I were to define the two respectively to someone who had never encountered the terms before, web2 would be the centralization of the early internet ecosystem in order to increase scalability + capture/generate profit funnels with web3 being the corresponding deconstruction back towards decentralization and economic distribution thanks to work on improved consensus algorithms in trustless settings.
    - valeness 5y ago
      But you have no evidence of this. You're just saying "This thing I like will be big because I like it" Web2 had a lot of stars align to become "the next big thing". (The newfound capacity for advertising, smartphones driving adoption, and the mechanisms for tracking and stealing user data). And none of those stars had to deal with privacy, decentralization, security, encryption, etc. All of these things that we have been trying to get consumers to value and consider for years; are actually antithetical to corporation's profit incentive. The tech industry has tried for a very long time. The concepts behind web3, such as decentralization, are not new. They have been tried, and created, and even somewhat adopted, for a VERY long time. Blockchain is just the new mechanism to try and attack this, but like most things on the internet, the problem is not a technical one: It's a social and economic one. Until you talk about dismantling capitalism, I don't see web3 as being anything more than a natural cycle of niche internet interest combined with speculative market scams that entrap vulnerable populations into caring about it just long enough for them get burned on the latest crypto rugpull.
axg11 5y ago
Why is everyone discounting the possibility that this is a Coinbase controlled account? They would surely need to purchase the tokens before they list them.
- giarc 5y ago
  $26-80k in coins doesn't seem like much?
  - axg11 5y ago
    Could be sufficient for (limited) market making. There are dozens of explanations for why Coinbase would want to hold these coins. They're not just an exchange anymore, they offer many other services.
- hmate9 5y ago
  No they don’t. You trade with other users not coinbase directly
  - aqme28 5y ago
    Coinbase almost definitely acts as a market maker as well. I would be very surprised if they didn’t at least seed the order book a little before listing new pairs.
    - Tenoke 5y ago
      Further, Coinbase often lists some new assets on Coinbase earn where it gives them for free to users.
    - scld 5y ago
      The definitely do act as a market maker. This is probably just them getting some liquidity before listing. With Mina they literally announced such a thing. https://twitter.com/CoinbaseAssets/status/1506717122499596297 https://twitter.com/CoinbaseAssets/status/150671712249959629...
  - 5y ago
danaos 5y ago
This is not new at all. I recall reading a post on reddit describing insider trading at coinbase years ago. That was back in 2016 when they added ETH. Apparently someone knew they would list ETH, days before it happened.I couldn't find the post, but this came to my attention: https://www.bbc.com/news/technology-42425857 https://www.bbc.com/news/technology-42425857
parkingrift 5y ago
Crypto fans want deregulated finance. Crypto fans get mad when deregulated finance is comically unfair. You really can’t make this up. Embrace this. It’s exactly what crypto is all about.
- ckastner 5y ago
  This is so on point. To me, and many others active somewhere on the "regulated finance" spectrum, the way crypto kept going on and on how awesome "deregulation" is from a consumer standpoint was tragically ironic. The vast majority of regulation is there to protect market participants.
  - TruthIsHeresy 5y ago
    >The vast majority of regulation is there to protect market participants. Anyone involved with GME knows this isn’t true.
    - kevingadd 5y ago
      The vast majority of the nasty stuff that happened around GME was not the work of regulators trying to hurt ordinary investors.
    - puppyprogram 5y ago
      The vast majority of regulation is there to protect CERTAIN market participants.
    - im3w1l 5y ago
      I actually think the opposite. Causing a short squeeze is market manipulation. Regulatory agencies let it happen anyway because it was done by random nobodies.
      - reedjosh 5y ago
        If a short squeeze happens that by definition means the shorts were over zealous. If a market allows shorts it should allow a squeeze as a mechanism of balance.
Tenoke 5y ago
'At Coinbase' isn't in the tweet and it implies this was done by Coinbase emoloyees while it's possible that e.g. someone involved with the project itself did it.
flarex 5y ago
I think that the best way for Coinbase to combat this is to make as much information public as possible in as close to real time. For example they have a listings website - make every application public in real time. If there are meetings about which asset to add then make the meeting public or the minutes immediately after the meeting. The only way this can be exploited is because there was some lag time between assets that were considered to be listed and the actual announcement. It doesn't help that they have employed some highly unethical actors in the past and completely failed to do their due diligence. For example when they employed people that were involved in selling hacking tools to nation states that were used in human rights abuses.
- vmception 5y ago
  it doesn't work that way. Coinbase's Asset Listing team contacts an inbox I'm on all the time just because an asset was indexed by their price tracker or Coinmarketcap once. There is no reason for that to be made public, and no reason for an insider to find a liquidity pool on Uniswap to start buying that token.
le0x99 5y ago
How‘s that surprising at all
djbusby 5y ago
This reddit thread was posted about it too. https://www.reddit.com/r/CryptoCurrency/comments/u2f90u/there_is_serious_insider_trading_going_on_at/ https://www.reddit.com/r/CryptoCurrency/comments/u2f90u/ther...
trustfundbaby 5y ago
"Every great cause begins as a movement, becomes a business, and eventually degenerates into a racket."
TheColorYellow 5y ago
Most people on HN here don't have a clue of what they are talking about, whether it is financial market regulation or cryptocurrency or blockchain technology. What makes this topic difficult to approach is the degree of complex issues which surrounds it. We are looking at the intersection of technology innovation, the long-standing failure of institutional and market mechanisms, and combined with a bleak macroeconomic context. Most people here should take a good reminder that they actually aren't experts in everything.
- thomassmith65 5y ago
  This community has been discussing crypto since 2009 (four months after 'Satoshi' mined the genesis block) https://news.ycombinator.com/item?id=599852 https://news.ycombinator.com/item?id=599852 It may still be true that "most people" here don't have a clue about it, but it's a hollow criticism since far more have a clue here than elsewhere.
  - dropnerd 5y ago
    you can be epicly early and epicly wrong. in that very thread: > Well this is an exceptionally cute idea, but there is absolutely no way that anyone is going to have any faith in this currency.
    - thomassmith65 5y ago
      I checked the history of the user who left that comment; it shows recent posts about crypto, too. That's thirteen years of following the subject. The claim in the parent post, roughly, is that the HN community is clueless about crypto and economics. In reality, HN had a large hand in popularizing crypto, and criticism here often is based on experience rather than ignorance.
jiveturkey 5y ago
I would attribute this to either a hacker, or malicious insider, with access to the announcements before they go public. Not official coinbase behavior. It's way way too obvious for coinbase to be doing this, and if they were why would it be in such small amounts. Twitter is great for getting the pitchforks out. Remember when the news wire was pwned? Someone was selling that news to various investment banks, who would trade on it. I smell a similar thing here. If coinbase were doing this themselves, would it be illegal? I'm not an expert but I don't think so. Still, it's a very bad look and it strains credulity. It could also be dumb luck. The same way people look at successful startups and think that is normal. I'd want to see a deeper analysis before judging.
cryptocoder88 5y ago
wow coinbase again with the fractional banking...
_5uxp 5y ago
related https://news.ycombinator.com/item?id=30797879 https://news.ycombinator.com/item?id=30797879

477 points by Shadonototra 5y ago

deleted 5y ago

[deleted]

This is going to sound naive, but I've zero idea how to draw my coins out of Coinbase and put them on my Mac / memory stick. I can't seem to find any legitimate source of info on how to do it.

pearjuice 5y ago

Why wouldn't they? The risk of getting caught is virtually zero if you do it right and even if you get caught you get a slap on the wrist and a fine at best. It's just pathetic that for a company which so hard tries to legitimize crypto they have issues like this over and over again. The inherent nature of a "get rich quick" ecosystem where the incentives to pull all kinds of shady and illegal actions are too high and the repercussions are basically non-existent.

Drakim 5y ago
In the world of cryptocurrency, even the wrist slap isn't a given. To me, cryptocurrency has been a very cool social experiment in what pure unregulated free market capitalism would work like in practice. Supposedly in place of regulations, companies would live on reputation and trustworthy business practices. If you use poisonous lead in your soup cans, people will stop buying your soup when word gets out, no need to regulate, companies will self-regulate to stay profitable and relevant. Reputation and trust is probably the most important thing Coinbase can hoard, it's the one way a legitimate company that acts like an exchange and/or bank for cryptocurrency can use to rise above all the scams and dubious services that's going on in the cryptocurrency world. And yet here they are pissing it down the drain for easy short-term profits. Surprise surprise. The truth is, trust, reputation and even human lives are just input values in the big equation of profits. The free market will always optimize for the best option, even if that option is an overall net loss for humanity.
- beaconstudios 5y ago
  The experiment wasn't even necessary - the Gilded Age was a libertarian's paradise with the gold standard and very little government regulation. What do we most associate with this era? Robber barons, utility monopolies screwing people over with ruthless business practices, confidence men and literal snake oil quack medicine. I genuinely can't think of a good (ie moral) reason to support the idea given how it is predicted to, and has been shown to, play out.
  - logicchains 5y ago
    >The experiment wasn't even necessary - the Gilded Age was a libertarian'paradise with the gold standard and very little government regulation. What do we most associate with this era? Robber barons, utility monopolies screwing people over with ruthless business practices, confidence men and literal snake oil quack medicine. The rate of economic growth and improvement in people's living standards was much higher back then than it is now. Similarly the average adult back then was much healthier than the average adult nowadays, who is likely overweight or obese with some chronic illness. In spite of the vast amount of pills modern people take. So healthcare hasn't necessarily improved much either.
    - soco 5y ago
      I don't know what the Gilded Age was (and too lazy to search) but, I quote "Over the past 160 years, life expectancy (from birth) in the United States has risen from 39.4 years in 1860, to 78.9 years in 2020"[1] so please do show some support for the affirmation "the average adult back then was much healthier". Unless you mean they all died healthy around 40 years of age - as in, they were totally healthy until 40 then the first illness killed them clean. [1]https://www.statista.com/statistics/1040079/life-expectancy-united-states-all-time/ https://www.statista.com/statistics/1040079/life-expectancy-...
      - tsimionescu 5y ago
        While your point is absolutely true, note that life expectancy shouldn't be taken as the literal age most people die. It is the expected value of your age at death. Just like the expected value of a coin flip being heads is 0.5, but no coin is ever 0.5 heads. Life expectancy at birth in the times before modern medicine has always been dragged down significantly by the huge rate of infant mortality. It was more common for a family to have 1-2 dead small children in their past than not. People who lived past 5 or 10 or so would often live to see 70 or so, and 80 or 90 year olds were not unheard of.
logicchains 5y ago
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 without any insider trading laws.
- lexapro 5y ago
  Anyone that loses money they wouldn't have lost otherwise is hurt by insider trading. And if you make it legal, people will try anything to gain insider information.
- lvl102 5y ago
  None of this is true. Don’t compare some shitcoin with nonexistent liquidity to real-world commodities.
  - cuteboy19 5y ago
    There is no economic utility in this system to begin with. So even if this were true, they would be optimising a quantity that would eventually be multiplied by 0 anyways.
- tsimionescu 5y ago
  > 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 in trades doesn't affect market efficiency, as all actors get a chance to decide a new price once the information becomes public. > 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. No, the people most hurt by insider trading are the cpunter-parties to those trades, who are acting on inferior information. It is a type of fraud - I'm acting as if the publicly known information is up to date, but in fact I know something the rest of the market doesn't about the value of the good I'm trading. It's like selling beans that have been publicly shown to be magical, while I happen to know the public show was staged and they are in fact normal beans.

whywhywhywhy 5y ago

Insider trading should just be legal and fine. I mean politicians do it every day so I don’t see why normal people shouldn’t be allowed to. Or make it actually illegal not just “legal if you have enough resources”

banachtarski 5y ago
This is a hilariously misinformed take, indicative of reading news in a bubble. The cryptosphere benefits when folks like you don your tin foil hats. You do realize the amount of scrutiny is far greater, affects all individuals above a certain pay grade at publicly traded companies, and that regulation continuously evolves? Protections against wash and insider trades are an important consumer protection but crypto advocates would rather you believe the current system doesn’t offer those affordances than admit deficiencies in their blockchain based ecosystems
- logicchains 5y ago
  Insider trading laws, to the extent they work, make the market less efficient because they delay the entry of information into the market. The majority of markets outside of equities, like real estate, don't have insider trading laws yet have managed perfectly fine.
  - tsimionescu 5y ago
    The real estate market requires sellers to disclose property risks to potential sellers, which is an alternative to insider trading laws (one that would scale poorly to stock trading). Similarly, commodities are often sold under a warranty, with any hidden flaws being the responsibility of the seller - another solution to the problem of unequal information.
Drakim 5y ago
Modern society would collapse if insider trading was legal. It would about as well as making bribery legal.

rvz 5y ago

Unsurprising as I said before [0], after what happened with OpenSea [1], Internet Computer [2] and now ApeCoin [3], you get this. This is how they pump and dump on retail over again. Rinse and repeat. [0] https://news.ycombinator.com/item?id=30725449 https://news.ycombinator.com/item?id=30725449 [1] https://www.cnbc.com/2021/09/15/opensea-insider-trading-rumors-are-true.html https://www.cnbc.com/2021/09/15/opensea-insider-trading-rumo... [2] https://startupsandecon.substack.com/p/you-dont-own-web3-a-coinbase-curse https://startupsandecon.substack.com/p/you-dont-own-web3-a-c... [3] https://www.financemagnates.com/cryptocurrency/apecoin-by-yuga-labs-is-launching-today-listed-at-the-top-crypto-exchanges/ https://www.financemagnates.com/cryptocurrency/apecoin-by-yu...

beaconstudios 5y ago
I honestly think you'd be hard pressed to find a crypto business that isn't rooted in some kind of scam, greater fool scheme, pyramid scheme, or the like. The whole industry is a mess.
- elefanten 5y ago
  And you think this on what basis? Engagement with the space, or your emotional knee jerk reactions to the occasional headline you read? This comment comes across utterly unserious.
  - beaconstudios 5y ago
    Based on both my observations of the space and interaction with crypto people and the crypto market. I know people who work in crypto too. Your defensive kneejerk reaction doesn't serve as an opposing argument - if you think differently, all you need to do is provide some evidence.
    - carmen_sandiego 5y ago
      I mean, most legit exchanges are not 'rooted' in scams, even if some of their employees take advantage. The only way you could say Coinbase were 'rooted' in that is to assume your premise: that crypto itself is a scam.

vosper 5y ago

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

londons_explore 5y ago
Anyone smart would use a new wallet each time.
- ianpurton 5y ago
  Not necessarily. If people buy after you trade then the value of your wallet goes up.
  - mousetree 5y ago
    Could you explain further. I'm not sure I understand how this relates to the parent comment?
    - drexlspivey 5y ago
      It’s in their interest if other people copy their trades because the asset values will go up
    - ButchC 5y ago
      Imagine you you had a magic button that suddenly increased demand for a volatile security any time you pressed it. That would be a fairly valuable thing for some people.
    - lbotos 5y ago
      If I have information that the price of x coin is going to go up and my friend knows I know, then they just need to follow my trades and they can make money too. If enough people follow my trades then this can generate demand and actually affect the price.
- 0xdeadb00f 5y ago

perihelions 5y ago

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.

anm89 5y ago
This was my question as well. Id assume its a grey area and that the sec could come after them if they wanted. Whether they would win is anorher story
soco 5y ago
It's not illegal but that's the very reason why some things got regulated in the first place.
matwood 5y ago
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.
- jchonphoenix 5y ago
  Insider trading on real estate is explicitly allowed by law.
- pardon_me 5y ago
  The world seems to run on "favors" of insider knowledge like this.
- dalbasal 5y ago
  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.

Steele69 5y ago

pingeroo 5y ago

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.

unnouinceput 5y ago
Because SEC is something specific to US and crypto is international perhaps? I doubt SEC has anything to say in this regard when the trading happens to belong to a citizen of China, for example. And while I do know Coinbase is US firm, so is AMEX. Insider trading at AMEX in regard to foreign citizens isn't something they can do anything about it, can they?
- hestefisk 5y ago
  The exchange is still physically registered in the US, similar to how non US citizens can place trades on NYSE etc. This cowboy market is madness and irresponsible.
  - valzam 5y ago
    But the crux is that those trades didn't occur on Coinbase, the assets hadn't even been listed yet. So it might very well be a case of a non-us citizen trading on a non-us exchange (or defi exchange). What can the SEC do in this case?
- wdb 5y ago
  But wouldn't US laws apply when it is an American company or trade in the US?
  - unnouinceput 5y ago
    Yes it does, hence why I gave both of them as examples above. Just take a look at AMEX history in regards to insider trading and foreign citizens, then tell me what SEC did in those cases. Coinbase is just the latest kid in the finance sector, with just a fraction of toys AMEX has palying with for decades already. Let me put it this way. Coinbase is just a sliver of what money AMEX is trading and is used as dust in eyes to blind people at real insider trading that happens in real money makers, which are AMEX and the rest of well established banks. Good luck SEC doing anything about it.

chaosbolt 5y ago

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.

sauwan 5y ago
Couldn't this just be that they keep some amount in cold storage that's not super easily accessible?
- KingOfCoders 5y ago
  8h? Iceage storage.
  - dannyw 5y ago
    It is entirely reasonable to use hardware security modules that enforce timelocks for signing.
    - vermilingua 5y ago
      If it were entirely reasonable they probably would have disclosed that as the reason.
- snarf21 5y ago
  They're an exchange. Cold Storage is not their job. It isn't much of an exchange if I have to wait 8 hours to put in a sell order.

SkipperCat 5y ago

I just consider Coinbase and it ilk as "safe" places for cryptocurrency. I don't think of them as ethical in the same way I'd think of an account at TDAmeritrade, Schwab, etc. Traditional brokerage houses have regulations forcing them to play fair, and reporting structures to enforce it. Crypto exchanges are trying to convince the world they are a more secure place for your coins. Better IT security and highly funded enough to probably make good on any hacks. The synergy is they want to keep me safe so they can keep their reputation (and their reputation gives them more business). Is that a fair deal? That's for each of us to decide. Keep your coins where you wish.

chrsw 5y ago
Their name is their name?
TheColorYellow 5y ago
I appreciate your sentiment, but I want to point out that your belief that "Traditional brokerage houses have regulations forcing them to play fair" and believing that there are adequate "reporting structures to enforce it" is a great example of the moral hazard that exists in the market today. I agree that law and regulation plays an important role in the market, but as the market has advanced and become increasingly more complex than previous models, I do not believe Law and regulation has kept up. The GME fiasco and the resulting litigation is a good example of these problems. And before anyone says this is proof the rules in place work - I'd like to point out that our online brokerage infrastructure and market structure has been around since the early 2000's. It's quite difficult to say what has not been surfaced and recognized. And no, despite the nature of the trade itself, no one should discredit the lawsuit as illegitimate. https://www.thinkadvisor.com/2021/01/29/gamestop-lawsuits-hit-schwab-td-ameritrade-interactive-brokers/ https://www.thinkadvisor.com/2021/01/29/gamestop-lawsuits-hi... The absurdity and extreme nature of the GME case shows tells me that there are outstanding issues throughout this value chain. And the belief that our system of rules adequately handles this just because the rules exist is a strong indicator of the moral hazard that prevades our market culture.
- SkipperCat 5y ago

5350-uiop-1130 5y ago

probably an employee or contact of an employee. frankly coinbase themselves are known to accumulate vast acoumts of a cryptocurrency before listing, so its not like they would have a reason to do this in such convoluted way.

lawrenceyan 5y ago

If you're jaded by web3, just imagine how people back in the day must have viewed web2. Now take a look at the the top 10 companies listed on the S&P 500.

Traster 5y ago
This is literally the scam of Web3. Just because you name something Web3 doesn't mean it's going to become the next big thing. There is no relationship between the success of Web2 and what will happen with Web3. Do you know how I know that? Because Web3 was coined by Sir Tim Berners Lee in 2006 as the semantic web and it didn't go anywhere. "Oh well, you see web3 is like web2 + 1 and we know web1+1 was great so web2+1 must be even better". It's an idiots logic.
- lawrenceyan 5y ago
  Feel free to call them whatever you want. They're just words meant to abstract a concept / zeitgeist. If I were to define the two respectively to someone who had never encountered the terms before, web2 would be the centralization of the early internet ecosystem in order to increase scalability + capture/generate profit funnels with web3 being the corresponding deconstruction back towards decentralization and economic distribution thanks to work on improved consensus algorithms in trustless settings.
  - valeness 5y ago
    But you have no evidence of this. You're just saying "This thing I like will be big because I like it" Web2 had a lot of stars align to become "the next big thing". (The newfound capacity for advertising, smartphones driving adoption, and the mechanisms for tracking and stealing user data). And none of those stars had to deal with privacy, decentralization, security, encryption, etc. All of these things that we have been trying to get consumers to value and consider for years; are actually antithetical to corporation's profit incentive. The tech industry has tried for a very long time. The concepts behind web3, such as decentralization, are not new. They have been tried, and created, and even somewhat adopted, for a VERY long time. Blockchain is just the new mechanism to try and attack this, but like most things on the internet, the problem is not a technical one: It's a social and economic one. Until you talk about dismantling capitalism, I don't see web3 as being anything more than a natural cycle of niche internet interest combined with speculative market scams that entrap vulnerable populations into caring about it just long enough for them get burned on the latest crypto rugpull.

axg11 5y ago

Why is everyone discounting the possibility that this is a Coinbase controlled account? They would surely need to purchase the tokens before they list them.

giarc 5y ago
$26-80k in coins doesn't seem like much?
- axg11 5y ago
  Could be sufficient for (limited) market making. There are dozens of explanations for why Coinbase would want to hold these coins. They're not just an exchange anymore, they offer many other services.
hmate9 5y ago
No they don’t. You trade with other users not coinbase directly
- aqme28 5y ago
  Coinbase almost definitely acts as a market maker as well. I would be very surprised if they didn’t at least seed the order book a little before listing new pairs.
  - Tenoke 5y ago
    Further, Coinbase often lists some new assets on Coinbase earn where it gives them for free to users.
  - scld 5y ago
    The definitely do act as a market maker. This is probably just them getting some liquidity before listing. With Mina they literally announced such a thing. https://twitter.com/CoinbaseAssets/status/1506717122499596297 https://twitter.com/CoinbaseAssets/status/150671712249959629...
- 5y ago

danaos 5y ago

This is not new at all. I recall reading a post on reddit describing insider trading at coinbase years ago. That was back in 2016 when they added ETH. Apparently someone knew they would list ETH, days before it happened.I couldn't find the post, but this came to my attention: https://www.bbc.com/news/technology-42425857 https://www.bbc.com/news/technology-42425857

parkingrift 5y ago

Crypto fans want deregulated finance. Crypto fans get mad when deregulated finance is comically unfair. You really can’t make this up. Embrace this. It’s exactly what crypto is all about.

ckastner 5y ago
This is so on point. To me, and many others active somewhere on the "regulated finance" spectrum, the way crypto kept going on and on how awesome "deregulation" is from a consumer standpoint was tragically ironic. The vast majority of regulation is there to protect market participants.
- TruthIsHeresy 5y ago
  >The vast majority of regulation is there to protect market participants. Anyone involved with GME knows this isn’t true.
  - kevingadd 5y ago
    The vast majority of the nasty stuff that happened around GME was not the work of regulators trying to hurt ordinary investors.
  - puppyprogram 5y ago
    The vast majority of regulation is there to protect CERTAIN market participants.
  - im3w1l 5y ago
    I actually think the opposite. Causing a short squeeze is market manipulation. Regulatory agencies let it happen anyway because it was done by random nobodies.
    - reedjosh 5y ago
      If a short squeeze happens that by definition means the shorts were over zealous. If a market allows shorts it should allow a squeeze as a mechanism of balance.

Tenoke 5y ago

'At Coinbase' isn't in the tweet and it implies this was done by Coinbase emoloyees while it's possible that e.g. someone involved with the project itself did it.

flarex 5y ago

I think that the best way for Coinbase to combat this is to make as much information public as possible in as close to real time. For example they have a listings website - make every application public in real time. If there are meetings about which asset to add then make the meeting public or the minutes immediately after the meeting. The only way this can be exploited is because there was some lag time between assets that were considered to be listed and the actual announcement. It doesn't help that they have employed some highly unethical actors in the past and completely failed to do their due diligence. For example when they employed people that were involved in selling hacking tools to nation states that were used in human rights abuses.

vmception 5y ago
it doesn't work that way. Coinbase's Asset Listing team contacts an inbox I'm on all the time just because an asset was indexed by their price tracker or Coinmarketcap once. There is no reason for that to be made public, and no reason for an insider to find a liquidity pool on Uniswap to start buying that token.

le0x99 5y ago

How‘s that surprising at all

djbusby 5y ago

This reddit thread was posted about it too. https://www.reddit.com/r/CryptoCurrency/comments/u2f90u/there_is_serious_insider_trading_going_on_at/ https://www.reddit.com/r/CryptoCurrency/comments/u2f90u/ther...

trustfundbaby 5y ago

"Every great cause begins as a movement, becomes a business, and eventually degenerates into a racket."

TheColorYellow 5y ago

Most people on HN here don't have a clue of what they are talking about, whether it is financial market regulation or cryptocurrency or blockchain technology. What makes this topic difficult to approach is the degree of complex issues which surrounds it. We are looking at the intersection of technology innovation, the long-standing failure of institutional and market mechanisms, and combined with a bleak macroeconomic context. Most people here should take a good reminder that they actually aren't experts in everything.

thomassmith65 5y ago
This community has been discussing crypto since 2009 (four months after 'Satoshi' mined the genesis block) https://news.ycombinator.com/item?id=599852 https://news.ycombinator.com/item?id=599852 It may still be true that "most people" here don't have a clue about it, but it's a hollow criticism since far more have a clue here than elsewhere.
- dropnerd 5y ago
  you can be epicly early and epicly wrong. in that very thread: > Well this is an exceptionally cute idea, but there is absolutely no way that anyone is going to have any faith in this currency.
  - thomassmith65 5y ago
    I checked the history of the user who left that comment; it shows recent posts about crypto, too. That's thirteen years of following the subject. The claim in the parent post, roughly, is that the HN community is clueless about crypto and economics. In reality, HN had a large hand in popularizing crypto, and criticism here often is based on experience rather than ignorance.

jiveturkey 5y ago

I would attribute this to either a hacker, or malicious insider, with access to the announcements before they go public. Not official coinbase behavior. It's way way too obvious for coinbase to be doing this, and if they were why would it be in such small amounts. Twitter is great for getting the pitchforks out. Remember when the news wire was pwned? Someone was selling that news to various investment banks, who would trade on it. I smell a similar thing here. If coinbase were doing this themselves, would it be illegal? I'm not an expert but I don't think so. Still, it's a very bad look and it strains credulity. It could also be dumb luck. The same way people look at successful startups and think that is normal. I'd want to see a deeper analysis before judging.

cryptocoder88 5y ago

wow coinbase again with the fractional banking...

_5uxp 5y ago

related https://news.ycombinator.com/item?id=30797879 https://news.ycombinator.com/item?id=30797879