Conflicts of Interest in Cryptocurrency
Cryptocurrencies such as Bitcoin, Ethereum, and other digital assets are decentralized networks that operate independently from any government or financial institution. As a result, there is an increased risk for conflicts of interest to arise within the cryptocurrency community. A conflict of interest occurs when someone has incentives to make decisions which benefit them personally at the expense of others’ interests. It can occur in various forms: insider trading, self-dealing by company executives, and even bribery/corruption between companies and governmental entities related to cryptocurrencies.
The most common type of conflicts involving cryptocurrencies involve exchanges – online platforms where users buy and sell different types cryptos. Exchanges typically profit from transaction fees they charge their customers on each trade made through their platform; however, these same exchanges also have access to nonpublic information about potential trades before they take place—information that can be used advantageously if not managed properly (e.g., insider trading). To prevent this kind of activity from occurring on its exchange platform, Coinbase requires employees who interact with customer data or participate in decision making regarding trading activities on Coinbase Pro to sign a code ethics agreement that outlines our policies against engaging in transactions based upon material nonpublic information obtained during work hours at Coinbase.[1]
Additionally it’s important for investors involved with cryptocurrency markets recognize possible areas where individuals may seek personal gain over the collective good — whether intentional or inadvertent – especially when dealing with issues like market manipulation via wash trading[2], front running[3] ,pump & dump schemes [4], rinsing out small retail traders [5]. Investors should always perform due diligence research prior to entering into any crypto investments so as not fall victim such practices which ultimately lead large losses downline .
In sum , while there will always be some degree risks associated investing cryptocurrencies , understanding what constitutes “conflict interests” help protect yourself those around you mitigate overall exposure levels – leading more profitable investment journey across long term future .
References
1 ) https://www2.coinbaseprosupportxsoarcom/hc/en-us/articles/360025491951-Code-of-Ethics 2)https://cointelegraphcom › news › how‐wash‐trading‐artificially‐inflates 3 )https://bitcoinmagazinecom 4 )http ://investopedia 5) http://fortune
