More advancement in technology comes with more room for trespassing.
Coinbase which is one of the biggest cryptocurrency exchanges in the world got encompassed with controversy when one of its employees leaked confidential data from the trading company’s cryptocurrency listing data before it was made public.
But before we dive deep into this high-profile case of felony, let us get an overview of the industry to have a better understanding of the entire drama that follows.
While most of us became familiar to the term ‘crypto’ with what they term as the ‘Elon Musk effect’ in the crypto world. This all goes back to when the very celebrated CEO of Tesla announced on his Twitter that they will be accepting ‘Bitcoin’, a cryptocurrency’, for buying their cars.
This was followed with an overnight rise in the value of Bitcoin. This followed with a series of dramatic downfall of all the cryptocurrencies and the global crypto market basically crashed when the Tesla CEO further announced that the company is going to sell 75% of its Bitcoin holdings stating two main reasons for this sudden contradiction.
Tesla informed that they are selling their Bitcoin holdings because they needed ‘lucidity’ as the COVID-19 pandemic hit the world and the company was in dire need for money. The second reason which they stated was that Bitcoin mining has harmful effects on the environment and they don’t want to promote that. Since then, the cryptocurrency market has seen crazy fluctuations.
While the term is quite popular, most of us try to avoid it as trying to understand it can get a little overwhelming and confusing at the same time as well as the fact that investing in it has to be very responsible, consuming and risky.
What is a cryptocurrency?
Cryptocurrency is a digital currency which exist in the form of tokens or coins which are traded digitally and the transactions are recorded in a blockchain technology. These digital currencies are encrypted and decentralized which means that there is no single authority or organization to which they belong unlike physical currencies like Dollar or Indian Rupees.
What is Insider Trading?
The term ‘Insider Trading’ comes from the stock market. It basically refers to a situation where someone from the company who has access to confidential data of the company leaks or uses it for their personal trading for huge amounts of profits before the information is publicly listed.
Insider Trading incidents happen both in the cryptocurrency world as well as on Non-fungible Token (NFT) Exchange.
By now we should have got a little idea of what all this is about, I guess?
Getting back to the case. Ishan Wahi, residing in New York, a former global product manager from Coinbase was held in the month of July of 2022 in charges of Insider trading. He was alleged of tipping or share data regarding certain cryptocurrencies to his brother Nikhil Wahi and their Indian-American friend Sameer Ramani before their listings over a period of several months.
The group seemed to manipulate by opening an anonymous wallet to trade and purchase all the cryptocurrencies which they had data beforehand of their listings, making an estimated profit of $1.5 million over the period. The alleged tried to flee the country trying to board a flight to India but were stopped and arrested by the US authorities.
US Attorney from the Southern district of New York has said that Nikhil Wahi, who was arrested in the month of July earlier this year has pleaded guilty for insider trading through the data his brother shared him before the Coinbase listings were publicly announced.
Wahi used an anonymous Ethereum Blockchain Wallet to trade cryptocurrencies where he purchased cryptos at lower rates and sold them at much higher rates according to the data shared to him which made him gain lumpsum amounts of ill-gotten profits.
Nikhil will be sentenced in a court trial in the month of December this year. The charge can carry a maximum of 20 years in prison
Cryptocurrencies, in most countries including the US, is not considered a security for several reasons. Therefore, it gets tricky to track cases like Insider Trading. To regulate and curb more such cases, proper laws are supposed to be made and implemented.