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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

#41

Post by soperj »

seanhunter wrote: post #25
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…

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…

The only instance where this isn't illegal is if you're a part of congress or the federal reserve.

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

#42

Post by ouid »

c7DJTLrn wrote: post #40

Unpopular opinion incoming: the concept of insider trading is stupid, and even more stupid applied to cryptocurrency. People will always find ways to profit from privileged information. The least careful ones will just keep getting caught while the most careful reap the rewards and get away with it. Cryptocurrency isn't even a regulated asset, how can someone be 'insider trading' it? What insider trading really means…

trading on information asymmetry is usually referred to as fraud. insider trading is just a subcategory that is relatively easy to prosecute and prevent

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

#43

Post by karpierz »

c7DJTLrn wrote: post #40

Unpopular opinion incoming: the concept of insider trading is stupid, and even more stupid applied to cryptocurrency. People will always find ways to profit from privileged information. The least careful ones will just keep getting caught while the most careful reap the rewards and get away with it. Cryptocurrency isn't even a regulated asset, how can someone be 'insider trading' it? What insider trading really means…

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.

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

#44

Post by valvar »

c7DJTLrn wrote: post #40

Unpopular opinion incoming: the concept of insider trading is stupid, and even more stupid applied to cryptocurrency. People will always find ways to profit from privileged information. The least careful ones will just keep getting caught while the most careful reap the rewards and get away with it. Cryptocurrency isn't even a regulated asset, how can someone be 'insider trading' it? What insider trading really means…

>Apparently it's legal for Congress to insider trade. It's legal for CEOs to insider trade.

I'm pretty sure it isn't.

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

#45

Post by rblatz »

seanhunter wrote: post #25
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…

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.

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

#46

Post by vageli »

seanhunter wrote: post #25
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…

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…

This article [0] seems at odds with your statement.

> Dirks v. SEC, 463 U.S. 646 (1983) was a pivotal U.S. Supreme Court decision regarding this type of insider trading. In Dirks, the Court held that a prosecutor could charge tip recipients with insider trading liability if the recipient had reason to believe that the information’s disclosure violated another’s fiduciary duty and if the recipient personally gained from acting upon the information. Dirks also created the constructive insider rule, which treats individuals working with a corporation on a professional basis as insiders if they come into contact with non-public information.

[0]: https://www.law.cornell.edu/wex/insider_trading

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

#47

Post by stingraycharles »

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 specific case? Would it mean that someone basically enriched themselves with Coinbase without it being through trades (just to name an example, skimming rounding inaccuracies in your favor) ?

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

#49

Post by snarf21 »

c7DJTLrn wrote: post #40

Unpopular opinion incoming: the concept of insider trading is stupid, and even more stupid applied to cryptocurrency. People will always find ways to profit from privileged information. The least careful ones will just keep getting caught while the most careful reap the rewards and get away with it. Cryptocurrency isn't even a regulated asset, how can someone be 'insider trading' it? What insider trading really means…

The point is that they can be caught and then prosecuted. It won't stop it but it makes it harder. People will always break the law. The point is to make that harder and have a punishment for doing so. We need better laws to prevent lawmakers from profiting as well.

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

#50

Post by judge2020 »

c7DJTLrn wrote: post #40

Unpopular opinion incoming: the concept of insider trading is stupid, and even more stupid applied to cryptocurrency. People will always find ways to profit from privileged information. The least careful ones will just keep getting caught while the most careful reap the rewards and get away with it. Cryptocurrency isn't even a regulated asset, how can someone be 'insider trading' it? What insider trading really means…

> Cryptocurrency isn't even a regulated asset, how can someone be 'insider trading' it?

Because the FTC says it’s a regulated asset and they have the world’s largest country to enforce this with courts and police action.

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