A Coinbase manager has been charged with insider trading by two US Federal regulators as the regulatory clamp down on crypto assets gains momentum. The perpetrator, Isham Wahi, was ultimately stopped at the airport gates trying to leave the country on a last-minute flight to India. He was found to be in possession of three large suitcases and enough personal items to support an extended stay in India.
The details of the charges against Wahi demonstrate the increasing willingness of authorities to use the strongest force they can to assert their authority over the crypto ecosystem. The Southern District of New York (SDNY) charges include wire fraud and wire fraud conspiracy; those served by the Securities and Exchange Commission (SEC) relate to insider trading.
“Fraud is Fraud, is Fraud”
One of the most notable developments is that this is the first time the SEC has issued insider-trading charges relating to crypto trading. In a welcome move for those who want to trade the sector with some sense that fraudulent industry insiders are not distorting the playing field, Manhattan US Attorney Damian Williams said in a statement. “Our message with these charges is clear: fraud is fraud is fraud, whether it occurs on the blockchain or on Wall Street.”
Wahi is charged with one of the oldest tricks in the book. It is alleged that during his time as a senior manager at Coinbase, he tipped off his brother and a friend with trade-sensitive information, which allowed the scammers to make profits above $1m.
The SDNY claims that between June 2021 and April 2022, the names of new altcoins due to be launched on the Coinbase platform were shared with the co-conspirators. Coinbase’s pool of approximately 150 digital currencies is constantly increasing, and when those new coins are listed on the platform, the rush of interest often sees the price surge. By simply using a foreign registered mobile phone and relaying the names of up-and-coming coins, Wahi could pinpoint those cryptos about to receive a seal of approval from one of the world’s most prominent crypto exchanges.
Coinbase itself has been referred to as cooperating with investigations. Paul Grewal, Coinbase’s chief legal officer, has gone on record to say: “Any illicit behaviour is something we take super seriously. We have zero tolerance for it.” Those words were backed up by Coinbase immediately conducting its own investigation and putting Wahi on unpaid administrative leave until officially firing him on July 15th.
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