What Is the Risk of “Insider Trading” When a Large Tranche of Tokens Is about to Be Released from a Vesting Cliff?

The risk is that individuals with non-public information (insiders) about the imminent token release may use that knowledge to profit. They could sell their existing liquid tokens or short the asset before the cliff date, anticipating the price drop from the sudden increase in circulating supply, thus unfairly profiting at the expense of uninformed public traders.