Coinbase vs. SEC – Insider Trading Case Raises Spectrum of Financial Securities

The Coinbase platform seems to be facing a lot of difficulties right now. With yet a development strategy recently announced as turned towards Europe and other parts of the world. But, at the same time, a succession of decisions and situations that suggest that all is not well for this historic exchange. And, to make matters worse, one of its former employees has just been arrested on a charge of insider trading while on the job. The opportunity for the Securities and Exchange Commission (SEC) of the United States to cover again – until disgust – on the eternal question of financial securities.

The current situation in the cryptocurrency market could be measured by the inability of its main players to anticipate its cyclicality. With layoff campaigns in shambles, which one wonders how far this hemorrhage will go. And, at the same time, geographical expansion strategies that seem to make Europe a destination of choice. With the last conquered country, Italy, which has just hosted Binance, Coinbase and Crypto.com in turn. Because even in times of crisis, building remains the real trend.

But obviously, the difficulties caused by the current situation are not the same for everyone. Because the Coinbase platform seems to have some structural problems, marked in the panties by its competitor Binance. With this small difference of having become, over the past year, the very first exchange in the cryptocurrency sector to be listed on the traditional stock exchange, under the COIN ticker. An experience that seems rather painful in this period of economic crisis.

Coinbase – Insider Trading Investigation

And as a misfortune never comes alone, a recent investigation has just been opened by the United States Department of Justice (DOJ) against a former employee of the Coinbase platform. With the charge, dubious practices considered to fall within the scope of insider trading. Because the employee targeted by this case used his position within the exchange to make very profitable investments, taking advantage before everyone else of the famous “Coinbase effect”. That’s to say the rise in the price of a cryptocurrency when the latter was officially listed on its exchange.

Exchange platforms

The Coinbase Effect – Myth or Reality?

Hugh B. – 24 Jun 2020 – 17:00

Returning to the front of the stage with each new listing of […]

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A fraudulent strategy that will have allowed offenders to pocket an estimated $1.5 million during this period. With operations involving no less than 25 different cryptocurrencies and 14 listings on the Coinbase platform. This within a market whose absence of ideological regulation should not be reduced to allowing this type of practice. What the lawyer Damian Williams in charge of this case recalls bluntly: “our message with these accusations is clear: fraud is fraud, whether it happens on the blockchain or on Wall Street“.

On at least 14 occasions, between June 2021 and April 2022, ISHAN WAHI knew in advance both that Coinbase planned to list particular crypto assets and the timing of Coinbase’s public announcements regarding those listings. And he hijacked this confidential information from Coinbase by passing it, either to his brother or to associates, so that they could make profitable trades in these crypto assets before public announcements.. »

Department of Justice (DOJ)

Operations that had already been highlighted by the crypto community, about Ethereum addresses causing massive purchases of cryptocurrencies just before their listing on Coinbase. As for example on April 12, 2022, when the account of the famous Coby pointed to an operation of this kind involving several hundred thousand dollars. And a culprit arrested on May 15 at the airport, while trying to flee justice.

Coinbase vs SEC – More financial stocks!

But this case does not end there. Because scavengers like to fly over battlefields to find new prey. And in the field, the Securities and Exchange Commission (SEC) of the United States has everything of an expert. Because following this legal procedure, the latter has just thrown a stone into the water by declaring that 9 of the cryptocurrencies concerned are in fact financial securities. That is, in this case: AMP, RLY, DDX, XYO, RGT, LCX, POWR, DFX and KROM. This without specifying however for what precise reasons, if not the fact thatthey were used in an insider trading case. And obviously that distinction is enough…at least for the SEC.

In this case, the facts state that a number of the crypto assets at issue were securities. And, as alleged, the defendants engaged in typical insider trading prior to their listing on Coinbase. Rest assured that we will continue to ensure a level playing field for investors, regardless of the label assigned to the securities concerned.s. »

Gurbir Grewal, SEC

A ludicrous situation, where the only real motivation of the SEC lies in the fact that it does not see control of the cryptocurrency market slipping away from it for the benefit of the Commodity Futures Trading Commission (CFTC). This is why she is trying to enter through the window here, when the door has recently been closed in her face in other similar cases. With, for example, Bitcoin which recently escaped it by acquiring the status of a commodity. And Ethereum whose designation has yet to be determined…

Regulation

Coinbase vs SEC – A lawsuit for regulatory clarifications?

Hugh B. – 09 Sep 2021 – 09:48

Not a day goes by without the (de)regulation bodies not […]

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An intervention by the SEC in this file which is not to the taste of the Coinbase platform. The latter has just launched a petition, in order to force the supervisory body to “develop a viable regulatory framework for digital asset securities. » This is so as not to nip in the bud a digital economy in full construction, for simple questions of regulatory turf wars.

No asset listed on our platform is a security. And the SEC charges are an unfortunate distraction from current and proper law enforcement action.. »

Coinbase

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