insider trading
Trading based on confidential information is a practice that involves making transactions in the crypto assets market based on confidential data, the disclosure of which could affect the value of a particular asset. This is an unethical practice that violates fair competition rules and can lead to artificially manipulating prices and causing unjustified market upswings or downturns.
Why is it illegal?
Trading based on confidential information is illegal because it provides an unfair advantage to investors who have access to confidential data. Such actions can disrupt the healthy functioning of the market and disturb natural trading processes, which harms market participants and leads to a loss of investor trust.
Effects on the crypto assets market
Practices related to trading based on confidential information can have a negative impact on the crypto assets market. They can lead to price manipulation, creation of artificial trends, and distortion of the real values of assets. In the long run, this can weaken investor confidence in the cryptocurrency market and make it less stable and more susceptible to manipulation.
How to prevent trading based on confidential information?
To prevent unethical practices related to trading based on confidential information, strict regulations need to be introduced, and relevant legal provisions need to be monitored and enforced. Companies and trading platforms should implement proper security measures to protect confidential data from unauthorized access. Furthermore, educating investors on investment ethics and the consequences of violating fair competition rules plays a crucial role in preventing trading based on confidential information.
It is important to remember that honesty and transparency are the foundations of a healthy crypto assets market. Therefore, combating unethical practices such as trading based on confidential information is crucial to ensuring stability and trust among investors and the long-term development of the cryptocurrency market.