How Does the Concept of “Insider Trading” Apply to Crypto Front-Running?

In traditional finance, insider trading involves using confidential, material non-public information for trading profit. On centralized crypto exchanges, this concept directly applies if an employee or affiliate uses knowledge of a large client order to trade first.

However, on decentralized exchanges, front-running is often based on publicly visible, pending transactions in the mempool, which is a technical exploitation rather than the use of confidential information. Regulatory bodies are working to apply or adapt existing market manipulation rules to cover these technical exploits.