Topic: Former Coinbase employee charge with insider trading. (Read 460 times)

Well this is pretty shitty.  Particularly shitty besides the insider trader is the fact some shitcoins were incorrectly and unfairly classified as securities without a true review by the SEC.  Seems like quite a feeble attempt to divert and distract.

That's what I thought as well, in the traditional market, yeah heard of it a lot.

But from crypto? it would have been the first in my opinion. I guess maybe the point is that it was an alleged 'insider trading', meaning he takes advantage of it and let other knows (his accomplice), so that they can make money. So regardless of how they defined bitcoin or ethereum or any other crypto that was involved in here.

I understand that the trades in question were made in advance of Coinbase announcing asset listings. So according to the DOJ, Wahi knew in advance that x token was about to get listed on Coinbase, and bought the token ahead of the announcement.

It is not clear to me who initiated the investigation, however, I do understand that Coinbase was investigating the employee in question and that he was fired prior to being indicted. He apparently bought a one-way ticket to India the day he was supposed to have a meeting with Coinbase security team.

I believe this is the first insider trading criminal case in the US. I understand that the case depends on the coins that Wahi is alledged to have traded as being "securities", and I don't think crypto meets that definition.

No, because even some Apple employee was charged also with insider trading recently.

Let's face it - insider trading will always stick around, not only for stocks, but in all other asset markets where they are treated like stocks (maybe you will even see some former gold hedge fund employee charged with "insider training with gold" )

While it's mostly high beta growth-focused tech companies (or at least they're probably affected most), yea it pretty much affected most companies.

Weirdly enough, apparently Binance is still aggressively hiring people in this state of the market. ChangPeng Zhao is just something else.

I'd say that extends beyond just tech companies too. Most of the world right now is struggling with the aftermath of the Covid pandemic, and the fact that ongoing war has meant things like fuel, and food rising in cost, and obviously the yearly inflation we're subject too.

I imagine we'll see a lot of cuts in the future, and these offloads by Coinbase might have just been that, trying to cut their losses, and maximise their profits. Especially, since Bitcoin will likely not be as popular as it was a few months ago for a while, meaning the need for additional staff decreases.

It's pretty much like 90%+ of tech companies though; not necessarily Coinbase.

They could honestly still salvage CoinbaseNFT. All they need to do is have a centralized marketplace of the NFTs and people would surely use it. The way they made CoinbaseNFT is almost no different from OpenSea hence why there's really no reason to use their platform.

Probably, but I doubt it.

ofcourse no one is surprised. but it happens in the fiat market too

a couple years ago i simply asked a couple exchanges if they would release data not about specific customers, but about their services total deposits/withdrawal amounts per day and they said that is was private business data. meaning its something that gained them an advantage as a business over competitors.

so yes exchanges do have alot more data then you think. even before their customers make an order. there are teams on exchanges that can see the in-flows and out-flows of coin/fiat and know before it hits the market the chances of large market movements approaching, via knowing the fiat:btc ratio of reserves, by knowing if they are buyer heavy or seller heavy..thus able to arbitrage the market before the deal is done by customer(s)

ofcourse exchanges should not be trading on its own market using information it knows pre-customer activity. but i wouldnt be surprised if they do arbitrage deals based on the customer info they have.

you would think that, if two different companies with 2 different sets of customers. where customers have their own random sentiments and decisions of pricepoints they want to buy in at or sell at.. you would/should notice a general difference in the small spikes and dips of prices on different exchanges.
but when 2 exchanges are literally like for like even to the small wiggles.. then its obviously most of the trade is arbitrage and not customer random purchase/sells

(binance in grey and green, coinbase in white and blue- screenshot of chart taken on live data while writing this post)


even if there was 'some' arbitrage and 'some' customer randomness(fair balance). you would notice 'some' inconsistencies. but when they are this mirrored. its mostly arbitrage orders taking place across markets rather than customer orders independently on each market

And the thing to gain from this is,,, not a single person in crypto is even surprised by this news  

IF anyone thinks CEX or even DEX operators are not doing insider trading,,, then they are innocent and have never seen how this space operates!

Remember, when you did not hear this happen, it is because no one found out yet, or no one has enough evidence to show it,,, but believe me this happens on a daily basis with all listings.

with all the NFT scams and the opensea DOJ thing in recent months, i think its not a technical issue that coinbase pulled back from. but a business/regulation risk decision to hold off from jumping on the NFT bandwagon. too much regulatory headache for a niche gamer token thing.
NFT are not usually 'traded' like daytrading assets/coins. NFT is more of a retail purchase/auction model, which doesnt really fit the income creation method coinbase likes(day trading is their wheelhouse)


coinbase is sister company to alot of crypto business. so i dont see them dying quickly if they were to die.
binance however is more of a solo company with more at risk to die with one fatal shot. but coinbase would need multiple hits from multiple directions to inflict lasting damage

they are well supported by the other sister companies. but with that said. if there was a supposed organised attack on the DCG. EG yes coinbase is sisters with greyscale that is suing the SEC. then putting a dent into coinbase can snowball effect cause dents in the sister companies too.
(ill let the tin foil hat guys play that hint out.. )

I think Coinbase are the target for negative news, because their enemies know that if they can take down one of the biggest exchanges in the Crypto scene, then they will put a serious dent in Crypto currency adoption. It is a lot like hackers going for the juiciest target, because they know that these centralized companies get the highest trading volume.  

We also know the US government are going to increase regulations and regulated exchanges like Coinbase will be their number 1 target.  

Right, now I understand a bit more. Fair enough then, if Coinbase acted upon this themselves, i.e started the investigation themselves, it at least shows a bit of integrity, especially since they've released it to the press also. Could've easily brush it under the rug to save face (which is what I thought might have happened with the mass firings).

Unless more investigations take place, and they find more. I doubt they'll fall any time soon. Obviously, hinted above that they could be at a lower profit than they were before. However, unless they've really messed up, they should be fine I'd expect. Probably one of the most successful exchanges, especially at getting their name out there.

the company having a bad time right now. they recently fired a lot of their employees. and then I heard they shut down their newly launched NFT marketplace which was a total failure and now this insider trading case, seems they are having a lot of issues specially from management.
it could be beginning of fall of one of the biggest blockchain companies in the world.

when a business is on a low, but can survive. it is the best time to open up all the trash publicly and let it all get put out on display. then next year. up, up up up up win win win.
many businesses when they know they are going to show a financial 'paper' loss to share holders, use that year to really go low and maximise losses. then the next year is pure gains.

only a small special team knew weeks-months ahead of coins that would be added to coinbase, so it narrowed down the possible employees to look into

it wasnt just that pump and dumps happened. it was the timing coincidence of certain tokens before coinbase told the public they were going to add it, meaning only a select few knew of the up coming adding of the token to the market listing. thus too coincidental that particular coins were pumped right when the secret talks happened internally about future market list additions, where the general public wouldnt know(yet) and most employees didnt even know

Yeah, it was more of a off the cuff statement.  I didn't genuinely believe it was a competitor, but the amount of news recently we've seen, and it being negative I just found it funny. Like I said, better to have this negative news coming out, now there's less eyes on Bitcoin news.

I know you said they looked at the pumping, and dumping, and that's what triggered it. However, surely that happens a lot? I don't watch particular tokens enough to actually be aware, but I suspect they get a lot of pumping, and dumping?

I'm wondering what the circumstances of this was, since I bet there's a lot of insiders doing this sort of thing, it's been documented in other industries quite often, so why hasn't it triggered a more in depth investigation?

Yeah, although could that potentially get them in hot water, since now that this investigation has took place, surely that'll warrant further investigations, and if Coinbase hasn't reported this sort of thing for dismissal, wouldn't they get in trouble for that?

i wouldnt be so sure its a competitor
i mean coindesk is a news outlet owned by the same group as coinbase. and they were one of the first to announce the story
https://www.coindesk.com/podcasts/coindesk-podcast-network/ex-coinbase-manager-among-3-arrested-on-crypto-insider-trading-charges-tesla-sells-75-of-its-bitcoin/
https://www.coindesk.com/policy/2022/07/21/us-authorities-arrest-3-including-former-coinbase-manager-on-insider-trading-charges/

while other media were just copy and pasting other media, coindesk already had a postcast out explaining it

sounds more like it

well this was from one investigation.. of a highly noted and publicly commented on pump and dump coincidence that happened over the last year. something they couldnt ignore or brush under the rug

coinbase also got rid of alot of other employee's recently that were deadweight for many reasons so im sure they spotted a few other employees doing less then good activities, which made the choice to remove them easy

Yeah, I was thinking the same. Almost like a competitor is going after them. Although, I guess if you're Coinbase it's best to get all the negative news out of the system while not many people are buying, and there's been a decrease in user base. News is often forgotten about, although it's hard to believe this is the first time it has happened, and weird how they've basically singled out one person, as there was likely many in their investigations.

add some detail/context

when coinbase was notified of pump and dump of eth based erc tokens strangely being pumped before public listing over the last year, they knew it could not have been random coincidence, they knew it must have been an insider.. coinbase investigated it and found out who, so coinbase informed FBI/SEC.
coinbase asked on may 11th their employee to attend a 'business meeting' on the 16th of may.(FBI would have been there to ask official questions)
on the 11th the employee agreed to attend(probably not let in on the fact the FBI were involved, but probably smart enough to guess they would be by the topic of the meeting). but then on the 15th  (before the meeting date) bought a plane ticket to india. which the FBI already had him on a watch list, so the ticket purchased flagged up. and so the FBI arrested him before he could board the plain.

Its first time i know that someone is charged. Insider trading is illegal on regulated markets. Is it illegal on crypto too?

According to insider trading. I haven't seen even a single new listing on any exchange (coinbase, binance etc.) that was not prepumped before announcement.


Maybe the reason is that COIN stock is trading at P/E=6 (average for nasdaq = 22), so very cheap and is bouncing from double bottom.

First time I heard actually that involved high personality, high profile exchange like Coinbase.

It's funny how they caught their former employee, and probably they didn't wash out their coins as they may have been track, how ironic. Or are they whistle blower or they were just caught with their pants down here?

In other words one person out of thousands who are pump and dumping shitcoins is charged with insider trading. They should take a look at some social media to see the pump and dump groups that are scamming people on a daily basis.

In any case, what's up with all these negative Coinbase news that keeps coming out recently? It's not like these things haven't been going on from the start of the company.

Bad thing is that this is a normal thing in the financial sector and is unlikely to be weeded out. Good thing is, things like this are not being swept under the rug and are being reported. Well, at least the ones we know about. It always raises the question of how many there are that just fly under the radar. Like that American stock broker in Japan, I think back in the 90s that didn't get discovered until he made it possible to get discovered and was doing it for years and years.

It is illegal and we can see traces of illegal trades, pumps from internal news-leaked tradings. Such pumps are unorganic and unatural.

Doing it and get caught are terrible. Not sure from which this case was investigated and finally get caught. It is a single case and is a negative news in already bad bear market with extremely negative sentiment. However if you think it as how the market is cleaned and improved to be better, it is actually a very positive news. If in future, we have more news like this, the crypto market will become a healtheir one.

Most definitely not the first time, but probably the first time when talking about a decently-sized public company.

Insider trading aside, the entire Coinbase asset listing team should be fired. Their listings are just absolutely and unbelievably horrendous.

https://www.justice.gov/usao-sdny/pr/three-charged-first-ever-cryptocurrency-insider-trading-tipping-scheme

A former employee of Coinbase, ISHAN WAHI has been accused of insider trading. Wahi used to work as product manager assigned to a Coinbase asset listing team, so has inside knowledge as which coins are going to be listed soon.

He then used his product with confidential information and share this to his brother NIKHIL WAHI, and an associate, SAMEER RAMANI. And they collectively gained $1.5 million approximately.

What do you think of this case? I'm not sure if this is the first time we have heard "insider trader" in cryptocurrency.

Will this set a precedence?