What Are Crypto Insiders?
Crypto’s era of unsupervised growth came to an end this year with a series of insider trading scandals. This type of activity will likely lead to people being less trusting of the crypto market and give regulators more ammunition to want to regulate.
ISHAN WAHI misappropriated confidential information regarding Coinbase’s plans to publicly list particular crypto assets and the timing of those asset listings. He then tipped his brother, NIKHIL WAHI, and RAMANI to purchase these crypto assets before Coinbase publicly announced their listing.
What is a crypto insider?
A crypto insider is someone who has non-public information that could affect the price of a crypto asset. This type of trading is referred to as insider trading and is often illegal in most jurisdictions. It is also a major concern for regulators who seek to curb financial misconduct and crime in traditional markets. It is thought that insider trading in cryptocurrencies might be pervasive, which can harm investors and market integrity. The Securities and Exchange Commission has recently filed the first-ever lawsuit charging insider trading in a cryptocurrency market, involving a former Coinbase employee. In this case, Ishan Wahi was charged with wire fraud for using confidential information about coins that would be listed on Coinbase to make trades. He was also joined by his brother Nikhil Wahi and friend Sameer Ramani. If found guilty, the defendants could face up to 20 years in prison.
Despite the potential benefits of cryptocurrencies, misconduct and criminal activity in markets based on digital assets may deter their wider adoption by the public and inhibit investor confidence.
Who are crypto insiders?
Crypto insiders are individuals who possess non-public knowledge about upcoming events and trends within the digital currency industry. They may be traders, analysts, or even executives who have access to confidential information about a company or project. This may involve the acquisition of non-public information about a new token, ICO or other technology project before the public has a chance to buy into it. One such case involved a former Coinbase employee who, along with his brother and a friend, allegedly used confidential information to trade on a new cryptocurrency before it was publicly listed. A federal court in Manhattan handed down a 10 month sentence to the trio on Tuesday.
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How can I become a crypto insider?
Insider trading is a legal term that refers to traders who trade securities based on information they have obtained from sources outside the company. In the stock market, there are a number of established systems and processes in place to prevent insider trading. However, in the crypto space, there are fewer such systems. For example, the Department of Justice has brought charges against a former product manager at Coinbase who possessed inside information about which cryptocurrencies would be listed on the exchange and profited when prices increased. This is a relatively new case in the cryptocurrency world, but it could be a sign that the government is becoming increasingly concerned about digital asset insider trading.