What they did is definitely unethical, but I place at least some of the blame on the government themselves.
How did "crypto" become a >$1T marketplace with so little legislation? Failures on multiple fronts of the US government.
Former Coinbase PM charged in cryptocurrency insider trading tipping scheme
111–120 of 446 posts
Re: Former Coinbase PM charged in cryptocurrency insider trading tipping scheme
#112Earlier quoted context omitted.
Your Warren Buffet example would absolutely be illegal. Trading on the basis of material non-public price-sensitive information or tipping someone off so they trade is market abuse (ie illegal) in Europe. In the US, the rules are a little more complex but basically yes it is illegal (if that's what he did). You absolutely don't have to have fiduciary responsibility, and you don't have to be an official insider, you s…
> Your Warren Buffet example would absolutely be illegal. My understanding is that it very much depends upon how the information was obtained. If I, as a third party, overhear Warren talking in a restaurant, that’s very different from hearing it during a Berkshire board meeting. Of course, everything, everywhere, is securities fraud. https://www.bloomberg.com/opinion/articles/2019-06-26/everyt...
That's one of the things I was handwaving over when I said "in the US it's more complicated". In the context of being an employee and hearing the information in your job it would pretty much always be illegal.
Re: Former Coinbase PM charged in cryptocurrency insider trading tipping scheme
#113> On the evening of Sunday, May 15, 2022, ISHAN WAHI purchased a one-way flight to India that was scheduled to depart the next day shortly before ISHAN WAHI was supposed to be interviewed by Coinbase. Prior to boarding the flight, ISHAN WAHI falsely told Coinbase employees that he had already departed for India when he had not. [...] Prior to boarding the May 16, 2022 flight to India, ISHAN WAHI was stopped by law enforcement and prevented from leaving the country.
hahahah
Re: Former Coinbase PM charged in cryptocurrency insider trading tipping scheme
#114Earlier quoted context omitted.
Your Warren Buffet example would absolutely be illegal. Trading on the basis of material non-public price-sensitive information or tipping someone off so they trade is market abuse (ie illegal) in Europe. In the US, the rules are a little more complex but basically yes it is illegal (if that's what he did). You absolutely don't have to have fiduciary responsibility, and you don't have to be an official insider, you s…
Then what about groups that do short reporting, they do an investigation into a company, take a short position, then release that information to the public? It sounds like that would fall under your definition.
The research they did would be obtainable from public sources rather than being classified as material non-public. That said, if you worked for (say) Pershing Square and knew Bill Ackman was about to announce a short in some stock and you traded it is your personal account that would absolutely be illegal.
Re: Former Coinbase PM charged in cryptocurrency insider trading tipping scheme
#115OMG 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?
Coinbase has an interest in not having their information abused, and when an employee granted access to that information abuses it it's fraud. It has nothing to do with crypto or insider trading regulations.
Re: Former Coinbase PM charged in cryptocurrency insider trading tipping scheme
#116Earlier quoted context omitted.
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.
I work for a company that provides financial services to/on centralized exchanges, but none of us really like the centralization there; even if it's our bread and butter (for now) I think most "crypto people" are more excited about decentralized exchanges.
Re: Former Coinbase PM charged in cryptocurrency insider trading tipping scheme
#117Note that they were charged for wire fraud and wire fraud conspiracy. So not for actual Section 10(b) violations, aka insider trading.
I have a friend in federal law enforcement that deals with crypto and financial crimes. He explains it like this:
"First, I need to get a 65 year old Federal prosecutor to understand what this case is about. Then, they need to be able to potentially argue the case in court and to a jury that almost always has no idea what any of this means."
He goes on to say that wire fraud is essentially a universal catch-all charge that distills the crux/burden of the case to two facts:
1) They committed fraud.
2) They touched a computer while doing it.
These two points are much easier to argue, prove, and most importantly get a jury to understand (and convict on). Even though most federal prosecutions result in a plea deal of some sort the simplicity of arguing and proving wire fraud results in a much higher rate of success for a favorable plea deal and/or the threat of going to trial with a crime that's so easy to prove.
Re: Former Coinbase PM charged in cryptocurrency insider trading tipping scheme
#118Note that they were charged for wire fraud and wire fraud conspiracy. So not for actual Section 10(b) violations, aka insider trading.
> each of which [wire fraud and wire fraud conspiracy] carries a maximum sentence of 20 years.
So they're looking at maximum 40 years. One of them is charged with two counts on each, so 80 years max.
It's not a light deal...
Re: Former Coinbase PM charged in cryptocurrency insider trading tipping scheme
#119Earlier quoted context omitted.
Who is the victim here?
The victim of insider trading is everyone else participating in the market that is not insider trading. Which, given the widespread reliance on 401k's for most of our accumulated wealth, is all of us.
But crypto is not an equity and your 401k is not tied up in it at all?
Re: Former Coinbase PM charged in cryptocurrency insider trading tipping scheme
#120Earlier 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.
Knowing privileged info and acting on it as an individual is not he same as intentionally misleading another person.
When you gain that information under the understanding you won't abuse it, solely for the purposes of abusing it, you have committed fraud.