One of the suspects in the first ever insider trading case involving crypto assets is reportedly pleading guilty to a scheme that allegedly brought him and his co-conspirators $1.5 million in illicit profits. According to a new report by Reuters, Nikhil Wahi pleaded guilty to a wire fraud conspiracy charge during a virtual court hearing […]
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The study found abnormal levels of return in a sample of tokens just before their listing announcement on Coinbase.
According to a recent study conducted by the University of Technology Sydney, researchers estimated that insider trading occurs in 10% to 25% of cryptocurrency listings.
In deriving the conclusion, researchers first sampled 146 token listing announcements on cryptocurrency exchange Coinbase between September 25, 2018, and May 1, 2022. Afterward, researchers examined the price movements of the sampled tokens in the time interval of 300 hours before Coinbase listing announcements up until 100 hours after the announcement, on various exchanges.
The hypothesis was that if insider trading was involved, tokens that were also available to trade on decentralized exchanges, or DEXs before the listing would see abnormal returns compared to those not listed on DEXs. Researchers claim that such levels of abnormal returns were observed to statistical significance in 10% to 25% of tokens studied and that the price patterns on DEXs immediately before the Coinbase listings were similar to "run-ups" witnessed in the known cases of stock insider trading.
Additionally, a small subset of wallet addresses on the aforementioned DEXs was suspected of strong accumulation and then quick disposition of tokens after the Coinbase listing went live. The study in the draft status has not been peer-reviewed.
The scopes of studies are normally limited by their ability to prove causation on top of correlation, or that the abnormal returns in the study can be definitely attributed to traders with non-public information accumulating ahead of time. Coincidently, around the same time the paper was submitted, the U.S. Department of Justice charged a former Coinbase executive with insider trading. The exec has since pled not guilty.
The former Coinbase product manager accused of insider trading is reportedly pleading not guilty to the charges filed against him. According to court records, prosecutors allege that Ishan Wahi disclosed Coinbase’s incoming token listings to his brother, Nikhil Wahi, and a friend, Sameer Ramani. Since the price of newly listed tokens on Coinbase tends to […]
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The U.S. Securities and Exchange Commission (SEC) has been heavily criticized for its approach to regulating the crypto sector. The criticism followed the securities regulator’s action against a former Coinbase employee in an insider trading case, in which the SEC named nine crypto tokens listed on Coinbase as securities. SEC Slammed for Regulation by Enforcement […]
Coinbase CEO Brian Armstrong says the exchange informed authorities about a suspected insider tipping scheme involving a former employee. Indictment records show Coinbase former product manager Ishan Wahi tipped his brother, Nikhil Wahi, and his friend, Sameer Ramani, of the firm’s upcoming public listing announcements, which include information about new crypto assets the platform will […]
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The commission could be performing routine check-ups on the exchange in question, or it could be looking for specific compliance violations to litigate against.
The Securities and Exchange Commission (SEC) has reportedly launched a probe to discover how crypto exchanges are working to prevent insider trading.
FOX Business reported on June 15 that a person with direct knowledge of the SEC’s activities said that the commission had sent a letter to a major crypto exchange requesting information about how the platform protects users from insider trading. The source believes the same letter has been sent to multiple exchanges.
It is not clear which exchange or exchanges have received the request, but the news outlet said Coinbase, Binance, FTX, and Crypto.com all declined to comment. The SEC also declined to confirm the probe.
The nature of the inquiry is also unclear. The SEC could be seeking out leads to litigate against an exchange’s potential legal violations via the enforcement division, or it could be a routine compliance check through the Office of Compliance Inspection and Examinations.
Allegations of insider trading at the largest nonfungible token (NFT) marketplace OpenSea have caught the attention of the SEC in recent weeks. Cointelegraph reported on June 3 that the commission could ultimately label NFTs as securities after charges of insider trading to OpenSea’s former product manager Nathanial Chastain surfaced.
Partner at the Hogan & Hogan law firm Jeremy Hogan told FOX Business that the SEC’s current interest in exchanges may stem from the allegations of insider trading on tokens that were scheduled for listing and were likely to see a price gain. Hogan said “it's that sort of trading that the SEC might be forewarning the exchange they need to get control of."
The proposed Digital Commodity Exchange Act of 2022 would see the SEC have its presumed jurisdiction over crypto exchanges rescinded. If it passes, the bill would give the Commodity Futures Trading Commission (CFTC) authority over crypto exchanges and stablecoin providers.
Current market conditions and ongoing scandals in the crypto industry may have catalyzed the SEC’s decision to start the inquiry. Early last month, the Terra ecosystem collapsed, after the Terra USD stablecoin depegged and the LUNA cryptocurrency plunged 99.9% in value.
Related: SEC chair warns about 'too good to be true' returns amid market downturn
More recently, the decentralized finance staking and lending platform Celsius has come under fire for freezing user withdrawals as rumors swirl around its potential insolvency amid huge transfers of crypto into FTX exchange.
The total crypto market cap has dropped below $1 trillion for the first time since February 2021. It is currently down 1.1% over the past 24 hours to $977 billion according to CoinGecko.
In a groundbreaking move, the U.S. Department of Justice (DOJ) is charging a former executive of the world’s leading non-fungible token (NFT) marketplace with insider trading. According to a new press release, the DOJ is charging Nathaniel Chastain, the former product manager of OpenSea, with wire fraud and money laundering after he allegedly used insider […]
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The document will require crypto companies to seek and prevent insider trading and market manipulation.
The British overseas territory of Gibraltar introduced a new regulatory package for distributed ledger technology (DLT) service providers. The document elaborates on the responsibilities of crypto businesses in regards to threats of market manipulation and insider trading.
On April 27, the government of Gibraltar published the 10th Regulatory Principle of the country's financial services regulation. The details are revealed in a Guidance Note, provided by the Gibraltar Financial Services Commission (GFSC), the chief finance regulator of the territory.
The regulation, crafted by a special working group that included both government officials and industry experts, sets operational guidelines for preventing market abuse. DLT providers are expected to monitor the movement of significant virtual asset holdings, publication of information that could be aimed at generating false or misleading market signals, and to investigate whether algorithmic-based systems are being used to generate deceptive data around transaction volumes.
The regulation also requires crypto companies to seek and prevent any insider trading activities and to inform the public of any relevant information “as soon as possible.” Proposed trading standards also include putting in place measures to reduce the liquidity providers and market makers' capacity to significantly alter asset prices.
Albert Isola, Gibraltar's Minister for Digital and Financial Services, expressed his confidence that the introduced measures will help the jurisdiction maintain its already strong relationship with the crypto sector. Isola commented to Cointelegraph:
"The introduction of the 10th Principle, with a significant input from industry, will develop further our regulatory framework. It provides permissioned firms with clear guidance on the standards that are required of them as well as providing consumer and jurisdictional protection."
One of the leaders of the working group, fintech lawyer Joey Garcia, commended Gibraltar's push to comply with FATF recommendations:
“It is great to see [...] Gibraltar lead in setting standards, particularly when the FATF has cited market integrity and prudential requirements as factors that jurisdictions should consider when developing regulatory requirements for the space.”
A home to the population of roughly 34,000 people, Gibraltar emerged as an attractive location for crypto in recent years. Following approval from the GFSC, crypto exchange Huobi had reportedly moved its spot trading operations to its Gibraltar-based affiliate.
While non-fungible token (NFT) assets have been extremely popular in 2021, there’s been a slew of issues tied to the ecosystem as well. A recent report indicates that roughly a dozen artists are considering taking legal action against an NFT collection called “Art Wars” because their original artwork was sold as NFTs without their consent. […]