A former Coinbase employee and two of him Comrades have been arrested before The Department of Justice (DOJ) following reports that the employee had conducted insider trading and passed confidential information to colleagues about currencies to be listed on the exchange in the future.
A man working with Coinbase has been arrested
The former employee – a man named Ishan Wahi – was part of the Coinbase team that listed the assets on the trading platform. The data he obtained through his position went to his brother Nikhil Wahi and friend of his brother Samer Ramani. Insider trading lasted for about ten months and the three individuals are believed to have earned up to $1.5 million in digital asset funds through the scheme.
The information was used to purchase the assets prior to their listing on Coinbase. Knowing that prices would rise once the assets were granted positions on the cryptocurrency exchange, the guys bought coins and regularly saw their stock expand as the coins were brought on the Coinbase train. After the prices rise, the men will sell their assets for a large profit.
Exchange executives first learned about insider trading in April after an internal investigation was conducted. Coinbase President Brian Armstrong clarified in a recent statement that he has handed over details of Mr. Wahye’s actions to the Department of Justice and that his employment with the company has ended. He indicated:
We have zero tolerance for this type of misconduct and will not hesitate to take action against any employee when we find a breach.
Damian Williams – the US Attorney for the Southern District of New York – says this is the first time that insider trading fees have been passed to illicit actors operating in the cryptocurrency space. He explained in an interview:
Our message with these accusations is clear: fraud is fraud whether it occurs on the blockchain or on Wall Street.
More bad luck for Exchange
Before being interviewed as part of the company’s investigation, Ishan booked a trip to India, likely in the hope of getting out of the country and avoiding arrest. He and his brother were later arrested in Seattle, Washington, although Ramani remains at large. He is listed as a resident of Houston, Texas, but is believed to have made it to India.
The Coinbase-focused story doesn’t play out well for the company since it has been at the center of intense controversy over the past few months. Things eventually took a negative turn for the cryptocurrency platform when it announced that it would impose a hiring freeze due to the ongoing volatility and market speculation in the crypto space. This eventually turned into a series of layoffs, with Coinbase losing about 18 percent of its employees.
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