Insider trading at Coinbase? The Public Prosecution Service to probe

Coinbase keeps stacking up scandals.

Coinbase keeps stacking up scandals. The largest Bitcoin exchange in the U.S. is dealing with falling crypto prices, is laying off about 18% of its staff, and now faces a case of potential insider trading. The US Attorney is arresting former Coinbase employee Ishan W. on suspicion of large-scale insider trading. This marks the first insider trading case in the crypto space.

As described by the New York State Attorney General's Office in an extensive press release, investigations are currently ongoing against the ex-Coinbase employee Ishan W. The former product manager would have systematically fed tips about upcoming coin and token listings at Coinbase to his brother Nikhil W. and friend Sameer R., who would have used the information for themselves. The Public Prosecution estimates the profits from this scheme at about 1.5 million U.S. dollars. An investigation is also ongoing against brother W. and friend R.

According to a press release, the two brothers have already been arrested, but Sameer R. is reportedly still at large for now. The public prosecutor says R. was aware of at least 14 listings between June 2021 and April 2022 and shared this information with one or both individuals. They could then use the information to open profitable positions, since the price of the involved coin typically rises after new listings are announced. W. would have been part of a small circle around Coinbase during the relevant period, who were aware of these new listings.

The systematic concealment of these transactions is also reflected in the fact that Nikhil W. and Sameer R. did not trade under their own names, but used third-party accounts. They reportedly tried to hide the trading history with an elaborate system of Ethereum addresses.

Twitter Influencer Becomes Private Detective

Cobie" was likely a key player in the investigation into the alleged insider trading case. The Twitter influencer, who has more than 700,000 followers, had in April this year pointed to traders buying assets worth "hundreds of thousands of U.S. dollars." The assets, as you might expect, were listed on Coinbase within 24 hours. According to the prosecution, the owner of the ETH address is friend R.

According to the prosecutor, Coinbase pulled out all the stops in the wake of Cobie’s tweet to track down the masterminds behind the insider trading scheme, eventually leading to Ishan W., who was subsequently fired by Coinbase. Coinbase states in a press release:

'Coinbase takes allegations of misusing internal information very seriously, as shown by our swift investigation into this matter. We absolutely do not tolerate this kind of misconduct and will not hesitate to take action against an employee when misconduct is found.'

When Ishan W. was notified of the investigations against him, he reportedly tried to flee to India. The police, however, detained the former Coinbase employee at the airport. Insider trading carries a maximum sentence of 20 years in the U.S.