Four Takeaways from the Crypto Insider Trading Thriller
Plus, the potential fallout for Coinbase.
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Four Takeaways from the Crypto Insider Trading Thriller
The Justice Department’s insider trading indictment issued Thursday contained details worthy of a Hollywood thriller. The plot is classic insider trading: a privileged financial employee gets nonpublic information, which is then passed on to, in this case, his brother and a friend. They then act on the information to make a profit—over time, more than a million dollars, according to the government.
The insider was Ishan Wahi, a manager in Coinbase’s assets and investing products group. The scheme was pretty straightforward: for much of the last couple of years, Coinbase has been regularly adding to the cryptocurrencies indexed (and thus available to trade) on its site; currently it’s well over 300. Wahi had access to which new coins were going to be added and usually when. It almost goes without saying that adding a coin to Coinbase’s index would give it a big pop. On 25 occasions in 2021 and early 2022, the government said, Wahi shared this information with his brother and friend, using a non-US phone to avoid detection. They would then use blockchain wallets to purchase the coins, often just minutes before the listing was made public.