A former Coinbase employee and two of his comrades have been arrested by the Department of Justice (DOJ) following reports that the employee had conducted insider trading and passed along confidential information to his cohorts about which coins would be listed on the exchange in the future.
A Man Who Worked with Coinbase Has Been Arrested
The former employee – a man named Ishan Wahi – was part of the team at Coinbase that listed assets on the trading platform. The data he garnered through his position went to his brother Nikhil Wahi and his brother’s friend Sammer Ramani. The insider trading went on for approximately ten months and the three individuals are believed to have garnered as much as $1.5 million in digital asset funds through the scheme.
The information was utilized to purchase the assets before they were listed on Coinbase. Knowing the prices would go up as soon as the assets were given positions on the crypto exchange, the men purchased the coins and regularly saw their stashes expand as the coins were brought aboard the Coinbase train. Following the price surges, the men would sell their assets for a significant profit.
Executives at the exchange initially learned about the insider trading back in April after conducting an internal investigation. Brian Armstrong – the head of Coinbase – explained in a recent statement that he had turned over details regarding Mr. Wahi’s actions to the Justice Department and that his employment with the company had ended. He mentioned:
We have zero tolerance for this kind of misconduct and will not hesitate to take action against any employee when we find wrongdoing.
Damian Williams – the U.S. attorney for the Southern District of New York – says this is the first time that insider trading charges have been passed to illicit actors working in the digital currency arena. He explained in an interview:
Our message with these charges is clear: fraud is fraud whether it occurs on the blockchain or on Wall Street.
More Bad Luck for the Exchange
Prior to being interviewed as part of the company investigation, Ishan had booked a flight to India, likely hoping to get out of the country and avoid capture. He and his brother were later arrested in Seattle, Washington, though Ramani remains at large. He is listed as a resident of Houston, Texas, but is believed to have made it to India.
The story centering on Coinbase doesn’t play well for the company given it’s been at the heart of heavy controversy over the past few months. Things ultimately took a negative turn for the digital currency platform when it announced that it was imposing a hiring freeze due to the ongoing volatility and market speculation of the crypto space. This ultimately turned into a series of layoffs in which Coinbase wound up losing about 18 percent of its staff.
Source: https://www.livebitcoinnews.com/former-coinbase-employee-charged-with-insider-trading/