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Former Coinbase PM charged in cryptocurrency insider trading tipping scheme

justice.gov

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Re: Former Coinbase PM charged in cryptocurrency insider trading tipping scheme

#101

Post by [deleted] »

stingraycharles wrote: post #47
est31 wrote: post #38

Note that they were charged for wire fraud and wire fraud conspiracy. So not for actual Section 10(b) violations, aka insider trading.

This may sound like a dumb question, but as a foreigner, I have no idea what wire fraud actually means, but I hear it pretty often. The explanation I found “Mail fraud and wire fraud are terms used to describe the use of a physical or electronic mail system to defraud another” doesn’t really help me further, other than it just being “fraud”. What would be the difference between insider trading and fraud, in this spec…

[deleted]

Re: Former Coinbase PM charged in cryptocurrency insider trading tipping scheme

#102

Post by giarc »

vishnugupta wrote: post #56

It talks volumes about the internal controls at CB that it took a tweet to expose this. Given the speed with which they grew last two years I expect their financial and security processes to be next to nothing. This is just tip of an iceberg. Insiders would have made tens of millions over last two years of bull run, if not more. This dude just got greedy and unlucky to get caught just as the crypto bubble began burst…

What could they do though? Ask all employees to provide their personal wallet addresses then monitor that? Seems unlikely to happen.

Re: Former Coinbase PM charged in cryptocurrency insider trading tipping scheme

#103

Post by munificent »

j0hnyl wrote: post #60
karpierz wrote: post #43

Earlier quoted context omitted.

By this same logic, fraud shouldn't be a crime. People will always find a way to profit by misleading people, and the most careful ones will reap the rewards and get away with it.

Who is the victim here?

It is a shared good that benefits all participants for a market to be efficient. Insider trading reduces market efficiency.

Re: Former Coinbase PM charged in cryptocurrency insider trading tipping scheme

#104

Post by tylersmith »

stingraycharles wrote: post #47
est31 wrote: post #38

Note that they were charged for wire fraud and wire fraud conspiracy. So not for actual Section 10(b) violations, aka insider trading.

This may sound like a dumb question, but as a foreigner, I have no idea what wire fraud actually means, but I hear it pretty often. The explanation I found “Mail fraud and wire fraud are terms used to describe the use of a physical or electronic mail system to defraud another” doesn’t really help me further, other than it just being “fraud”. What would be the difference between insider trading and fraud, in this spec…

Mail/wire fraud is simply fraud that was conducted using mail or other communications platforms.

Insider trading is specifically about rules around trading securities.

In this case the allegation has nothing to do with securities trading, it's about an employee defrauding their employer by misappropriating privileged information.

Re: Former Coinbase PM charged in cryptocurrency insider trading tipping scheme

#105

Post by toolz »

fny wrote: post #31
princevegeta89 wrote: post #28

OMG gimme a break, isn't crypto itself a huge insider-trading sort of market? Why is this such a big deal for Coinbase unless there are other intentions behind this arrest?

Yes it is... which is why the hammer needs to come down and hard.

This is a value judgement. If you find crypto to be unfair, there's a very simple solution that doesn't require bringing in guys with guns to deal out punishment. You can simply just not participate.

In an ideal world we could get rid of insider trading, but selectively punishing people just makes the problem worse and with so much of congress dominating the market I think it's quite clear the punishment is selective and itself incapable of being fair.

It is much worse to give the illusion of fairness than to let people freely choose whether the "fairness" of some market is enough to justify participating. Of course, this is just my opinion.

Re: Former Coinbase PM charged in cryptocurrency insider trading tipping scheme

#106

Post by tempsy »

parineum wrote: post #5
modeless wrote: post #2

The amounts in these insider trading schemes always seem small to me. $750k per person? If I had advance knowledge of all Coinbase listing announcements I'm pretty sure I could make more than that!

750k is a lot of money.

It's definitely not when you're risking your livelihood.

Total comp for a mid level PM is probably north of $400k, so this is less than 2 years salary.

Re: Former Coinbase PM charged in cryptocurrency insider trading tipping scheme

#107

Post by ChainOfFools »

pjc50 wrote: post #90
vishnugupta wrote: post #56

It talks volumes about the internal controls at CB that it took a tweet to expose this. Given the speed with which they grew last two years I expect their financial and security processes to be next to nothing. This is just tip of an iceberg. Insiders would have made tens of millions over last two years of bull run, if not more. This dude just got greedy and unlucky to get caught just as the crypto bubble began burst…

A lot of people suspect there's ""official"" insider trading at the exchanges; there's no reason for the exchange not to front-run orders or fake the order book if they think they can get away with it. Or trade against heavily leveraged positions to liquidate them. Or prop-trade with the customers' money.

Crypto people love to talk about incentives when referring to things like crypto adoption by the market, or corrupt actions on the part of incumbent powers like bankers or politicians.

They are much less enthusiastic about discussing incentives when it comes to things like exchange operatiors front running their clients, centralizing forces in crypto generally, etc.

Re: Former Coinbase PM charged in cryptocurrency insider trading tipping scheme

#108

Post by chollida1 »

giarc wrote: post #102
vishnugupta wrote: post #56

It talks volumes about the internal controls at CB that it took a tweet to expose this. Given the speed with which they grew last two years I expect their financial and security processes to be next to nothing. This is just tip of an iceberg. Insiders would have made tens of millions over last two years of bull run, if not more. This dude just got greedy and unlucky to get caught just as the crypto bubble began burst…

What could they do though? Ask all employees to provide their personal wallet addresses then monitor that? Seems unlikely to happen.

I mean, this is exactly what happens when you work for a hedge fund. You have to provide statements for all trading accounts you and your immediate family own.

So, yeah, this is exactly what coin base should be doing. They should require all employees to list all account addresses they have access to.

It's a trivial ask for the employee and its trivial to scan

Re: Former Coinbase PM charged in cryptocurrency insider trading tipping scheme

#109

Post by rmbyrro »

duxup wrote: post #100
rmbyrro wrote: post #91

Earlier quoted context omitted.

> Ethereum blockchain wallet “that bought hundreds of thousands of dollars of tokens exclusively featured in the Coinbase Asset Listing post about 24 hours before it was published.” It talks volumes that had they done this in a privately held network, it might have been harder to catch them. All the "blockchain is anonymous, hence it's made by and for fraudsters" is a total nonsense.

And yet the story is about a fraudster?

About a fraudster that was caught by a random person who could look at his fraud publicly, under the light of the sun.

The part after "fraudster..." is what sets apart the blockchain and traditional financial networks, when it comes to fraud.

If you commit fraud in the traditional financial system, only the financial institution has a chance to find it suspicious and tip the government agency responsible to investigate.

In the blockchain, literally ANYONE ON THE PLANET can keep an eye on the fraudster.

Re: Former Coinbase PM charged in cryptocurrency insider trading tipping scheme

#110

Post by tylersmith »

bpodgursky wrote: post #7

Hmm. Is this actually "insider" knowledge? I personally question the validity of this charge. This employee had knowledge of what COINBASE was going to do with the currency (ie, list it). He had no fiduciary responsibility as pertaining to the coin itself. This is like knowing that Warren Buffer is going to say good thing about Microsoft tomorrow, and buying it today as a result (expecting it to rise). Is that actual…

This has nothing to do with fiduciary duty. He defrauded Coinbase and is being charged for that. Deliberately misappropriating privileged information like that is absolutely a crime.
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