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

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.