Good, bad and evil. Yesterday, Ishan Wahi, a former Coinbase product manager, and two members of his inner circle were arrested for insider trading and wire fraud. The fact is that the thief, the American financial police, diligent, found material to harm the giant of cryptography.
Cop and thief
The secret of our case was revealed yesterday. The Ministry of Justice (Ministry of Justice) announced the arrest of three people. Former CEO, Product Manager of Coinbase, his brother and friend. The three accomplices are accused of insider trading and would have earned $1.5 million from their crime.
The procedure is quite simple. Our scammers used centralized exchanges with borrowed names. They then transferred the funds to anonymous wallets on the Ethereum blockchain.
In a press release publicly opening the case, U.S. Attorney Damian Williams confirms and argues the importance of a rigorous trial in this case to fight fraud:
“Today’s allegations are another reminder that Web3 is not a lawless zone. Last month I announced the first ever insider trading case involving NFTs, and today I am announcing the first ever insider trading case involving the cryptocurrency markets. (…) The Southern District of New York will continue to work hard to bring fraudsters to justice wherever we find them. »
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XXL Reward on Coinbase: $1.5M Theft
I. Wahi, our respondent, has been in charge of listing assets on Coinbase since October 2020. From August 2021 to May 2022, he was among the employees who therefore knew the future launch dates for cryptocurrencies registered and supported by Coinbase. He had access to confidential company discussions. Good prince, this one informed his two accomplices. This then allowed them to buy cryptocurrencies at low prices prior to their launch.
Fraudsters began to be noticed on April 11. Then a new listing of 10 cryptocurrencies was expected on Coinbase. At the time, Kobe, a crypto influencer, reported an Ethereum address that had acquired hundreds of thousands of dollars worth of so-called proprietary cryptocurrency.
“Found an ETH address that bought hundreds of thousands of dollars worth of tokens, exclusively featured in the Coinbase Asset Listing publication, approximately 24 hours before publication”
Tweet from Kobe
Coinbase responded publicly on Twitter and announced that it was investigating. Subsequently, the American giant confirmed on its medium account its strict policy in terms of maintaining the secrecy of confidential information.
In this sense, the director of security at Coinbase called I. Wahi on May 11th. Call subject? May 15 meeting. However, the investigation shows us that the alleged perpetrator confirmed his presence and then slips away to India.
Always a good prince, he certainly took care to warn his accomplices. On May 16, Ishan Wahi and his brother were arrested. In total, 14 cryptocurrencies were acquired in this way.
Coinbase pleads not guilty before SEC
In this case, the SEC, always animated when it comes to slapping a cryptocurrency platform, decided to launch an investigation against Coinbase in parallel. Indeed, the latter would not have performed the registration of assets as securities. Thus, the exchange did not comply with anti-fraud laws required by the Department of Justice.
This debate, which echoes the failures of Ripple and its XRP cryptocurrency, is deplored by Coinbase, which then decides to open a petition with the SEC to clearly define the legal basis for cryptocurrencies:
“Cryptocurrencies represent the next wave of innovation in the markets themselves – and any country that encourages this innovation while keeping investors safe will reap huge profits. We need the SEC to write rules again that unlock the potential of the US financial markets, this time fueled by the benefits provided by cryptocurrencies.”
As such, cryptocurrency platform Coinbase laments the lack of flexibility of traditional finance. The latter does not take into account the parameters and fundamental principles of decentralized finance. News aside, this scam will finally only highlight the shortcomings of US regulation, which, while general and indecisive, does not set a clear legal framework for cryptocurrencies.
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