A new academic study found that insider trading was a bigger issue than previously thought at cryptocurrency exchange Coinbase (COIN), suggesting market regulators seeking to police trading may have more work ahead of them.

Researchers at the University of Technology Sydney estimate that insider trading, or front-running, occurred on 10% to 25% of new crypto listings at Coinbase between September 2018 and May 2022, generating at least $1.5 million in profits for whomever was behind the transactions.

A giant like Coinbase listing a token can give cachet and dramatically boost liquidity for a token, causing its price to rise. Someone could n illegally n profit from that by purchasing a cryptocurrency before its listing is made public.

Read more: BlackRock to Offer Crypto for Institutional Investors Through Coinbase Prime

And, indeed, there have already been allegations of insider trading at Coinbase. In July, the U.S. Department of Justice charged a former Coinbase product manager, his brother and their friend with wire fraud and insider trading. The trio were accused in that case, which revolved around tokens including TRIBE and ALCX, of making $1.5 million illicitly.

The new study n which has not yet been peer reviewed n suggests the problem was broader than what emerged in that case, though, because the researchers said they found instances of insider trading that go beyond the scope of the July allegations.

lOur analysis shows significant price run-ups before official listing announcements, similar to prosecuted cases of insider trading in stock markets,r according to the paper written by Ester Felez-Vinas, Luke Johnson and T_lis J. Putni_s. lThese findings point to cryptocurrency markets being susceptible to the same forms of misconduct that regulators have for a long time grappled with in traditional financial markets.r

Read more: Ex-Coinbase Product Manager Pleads Not Guilty in Crypto Insider Trading Case: Report

A Coinbase spokesperson responded to the study in a statement: lCoinbase takes allegations of front-running incredibly seriously and we work hard to ensure all market participants have access to the same information. As part of this effort, we have taken steps to minimize the possibility of technical signals during asset testing and integration steps. We have zero tolerance for illicit behavior and monitor for it, conducting investigations where appropriate.r

The study notes the date Sept. 25, 2018, when Coinbase updated its listing process to rapidly list new assets, as CoinDesk reported at the time.

The researchers said they found at least four crypto wallets involved in suspicious trading. The behavior, repeated over and over, involved these wallets buying tokens in the hours before Coinbase announced it was going to list them.

Read more: Coinbase Will Be lMeaningfulr Beneficiary of Ethereum Merge, JPMorgan Says

lEach wallet sent funds to the next wallet to continue with a similar trading pattern: buying tokens prior to their listing announcement and selling them after the announcement date,r the paper said.

The paper said the four wallets earned 1,003 ether (ETH) in profit from such price jumps.

(University of Technology Sydney)

UPDATE (Aug. 17, 2022 16:15 UTC): Corrects that a former Coinbase product manager is involved in the insider trading case.