Potential insider trading was spotted on the Coinbase platform last April. The latter then investigated to identify three suspects, including one of their employees. The latter was fired and all three are now facing US justice.
Coinbase investigated insider trading
Earlier this year, the platform coin base was rumored insider trading. In order to dispel any suspicion, the stock exchange then took the matter seriously To carry out an investigation. It turned out that an employee did in fact leak confidential information to his brother and a friend. The employee in question was then fired and Coinbase report their findings to the court.
Coinbase CEO Brian Armstrong made a point of disclosing the facts on his Twitter profile, stating that his company actively monitor illegal activities :
1/ At Coinbase, we actively monitor illegal activity and investigate suspected wrongdoing. In April, just before the listing on Coinbase, we received information about a possible asset frontrunning. We immediately launched an investigation into this.
— Brian Armstrong – barmstrong.eth (@brian_armstrong) July 21, 2022
Ishan Wahi, former product manager at Coinbase, and his brother Nikhil Wahi were accordingly arrested yesterday in Seattle. It’s your accomplice, Sameer Ramani also burdened, but still free. All three are facing criminal charges for using confidential Coinbase information to commit insider trading in the crypto assets to be listed. You risk up to one each a maximum of 20 years imprisonment.
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A case highlighted by social networks
It was crypto influencer Cobie who noticed suspicious coincidences last April portfolio activity. In fact, one address had purchased certain tokens for hundreds of thousands of dollars 24 hours before Coinbase made the announcement possibly listed on the platform.
According to the investigation, the three people repeated their misconduct 14 acquisitions on 25 different assets. The events took place between June 2021 and April 2022 to generate an estimated unrealized capital gain of $1.5 million.
Michael J. Driscoll, Associate Director of Federal Office of Investigations (FBI) in New York, which was also pursuing a similar case for OpenSea, spoke on the subject:
“Although the allegations in this case relate to transactions made on a crypto exchange rather than a more traditional financial market, they still constitute insider trading. […] Today’s action was intended to demonstrate the FBI’s commitment to protecting the integrity of all financial markets, old and new. »
On May 16, Ishan Wahi was called to a meeting by Coinbase’s security director as part of the investigation. Then the suspect tried to flee to India the day before the interview and was arrested by law enforcement before boarding.
This survey shows that given the apparent anonymity of our ecosystem, which is often questioned by politicians, a person’s activity on the blockchain always leaves a trace. Here, moreover, it is the public nature of Ethereum (ETH) that has allowed the community to expose a crime that may be would have gone unnoticed in traditional finance.
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Source: United States Department of Justice
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