Coinbase is not getting out of the scandals. The largest Bitcoin exchange in the USA is struggling with falling crypto prices, laying off about 18 percent of the workforce and now also has a case of possible insider trading on the cheek.
As the New York Prosecutor’s office writes in an extensive press release, investigations are currently underway against ex-Coinbase employee Ishan W. The former product manager is said to have systematically given brother Nikhil W. and friend Sameer R. information about upcoming coin and token listings at Coinbase, which the two are said to have used for themselves. The prosecutor’s office estimates the profits generated from this at 1.5 million US dollars. Brother W. and friend R. are also under investigation.
According to the press release, the two brothers have already been arrested, but Sameer R. remains at large for the time being. According to the public prosecutor’s office, R. is said to have been aware of upcoming listings on the exchange in at least 14 cases between June 2021 and April 2022 and to have passed this information on to one or both persons. These, in turn, were able to open profitable positions based on the information, since after the announcement of new listings, the price of the coin in question typically increases. W. is said to have been part of a small circle at Coinbase during the period in question, who knew about new listings. However, the disclosure of the information was not permitted by the employer.
The criminal energy with which the accused are said to have acted is also shown by the fact that Nikhil W. and Sameer R. had traded the assets in question not in their own name, but with the help of accounts that run on third parties. In addition, they are said to have tried to disguise the transaction history using a complicated system of Ethereum addresses.
Twitter influencer becomes a private investigator
“Cobie” was probably also decisively involved in the investigation of the alleged case of insider trading. The Twitter influencer, who has over 700,000 followers, had already pointed out traders who had bought assets worth “hundreds of thousands of US dollars” in April of this year. The assets, you guessed it, were listed on Coinbase within 24 hours.
Found an ETH address that bought hundreds of thousands of dollars of tokens exclusively featured in the Coinbase Asset Listing post about 24 hours before it was published, rofl pic.twitter.com/5QlVTjl0Jp
– Cobie (@cobie) April 12, 2022
According to the public prosecutor’s office, the owner of the ETH address should be friend R.
According to the prosecutor’s office, in the course of the Cobie tweet, Coinbase would have set all the levers in motion to locate the authors of the insider trading system and finally came to Ishan W., who was then dismissed. In a press release, which the US company had initiated in the course of the internal investigation against the participants, it says:
Coinbase takes allegations about the misuse of company information very seriously, as our quick investigation of this matter shows. We have zero tolerance for this type of misconduct and will not hesitate to take action against any employee if we find any misconduct.
When Ishan W. had been informed about the ongoing investigation against him, he had probably still tried to leave the country for India. However, the police stopped the ex-Coinbase employee at the airport.
Insider trading carries up to 20 years in prison in the United States.