DOJ Charges Ex-Coinbase Employee With Insider Trading

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DOJ Charges Ex-Coinbase Employee With Insider Trading

Three people, including a former Coinbase (COIN) employee, have been charged with cryptocurrency insider trading, a first in the crypto sector. On July 21, the United States Department of Justice (DOJ) issued a press statement claiming that there was no tolerance for lawbreaking in the decentralized technology realm. The indictment was unsealed in Manhattan federal court, and the charges were filed in the Southern District of New York.

Key Takeaways

  • Ishan Wahi, Nikhil Wahi, and Sameer Ramani were charged with wire fraud conspiracy and wire fraud by the Department of Justice.
  • The lawsuit is the first involving bitcoin trading insider trading.
  • Authorities in the United States have been cracking down on the cryptocurrency market in recent months, insisting that the business follow the rules.

Ishan Wahi was a former Coinbase product manager who informed his brother Nikhil Wahi and a friend about assets that were going to be published on the exchange. When such listings occur, particularly on a prominent exchange like Coinbase, the price of such cryptocurrencies tends to skyrocket.

Over a ten-month period, the three profited $1.5 million from 25 cryptocurrencies about which Ishan Wahi had previous knowledge. According to the documents, the transactions took place between at least June 2021 and April 2022. Powerledger (POWR), Gala (GALA), XYO (XYO), Alchemix (ALCX), and Tribe were among the cryptocurrencies traded (TRIBE).

The Department of Justice has charged the three people with wire fraud conspiracy and wire fraud. The third culprit, Sameer Ramani, is still at large, while the other two have been charged in the United States District Court for the Western District of Washington.

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U.S. Attorney Damian Williams was blunt in his opinion of the matter, stating that the charges served as a warning to web3 that it must respect the law. Williams was also a witness in the first-ever insider trading prosecution using NFTs.

Following the allegations, Coinbase issued a statement. On July 21, the exchange tweeted that it has sent information to the Department of Justice and that it monitors for unlawful activities and investigates reported wrongdoing. Chief Security Officer Philip Martin also said that the employee had been sacked and that the company was committed to preventing misbehavior.

The Bottom Line

Many investors are disappointed to find that a major exchange has engaged in insider trading, particularly at a time when the crypto markets are floundering. It also comes at a time when bitcoin legislation is taking form throughout the globe.

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