A trio of fraudsters with ties to Coinbase have been busted by the FBI and the Department of Justice, following reporting by a Twitter account by the name of Cobie. Cobie consistently criticized the way listings at the cryptocurrency exchange were happening over the years, and said that many of them appeared suspicious. In fact, he described them as “a huge mess.”
FBI Investigation Leads to Indictment of Suspected Inside Traders
From Coffeezilla to Cobie, Twitter cryptocurrency vigilantes have been fighting the good fight and they may have finally succeeded as one of the people indicted on charges of insider trading at the prominent exchange is an employee. Ishan Wahi, a former product manager at Coinbase Global, has allegedly tipped his brother, Nikhil Wahi, and their friend, Sameer Ramani, about imminent listings of cryptocurrency coins.
Ishan would tip the pair who would then start buying up the cryptocurrency rapidly investing thousands of dollars in it. Once Coinbase announced the listings, their investment would multiply as exchange listings of tokens are associated with quick and robust increases in the valuation of digital assets. In conducting the investigations the FBI has most likely used a tweet by Cobie in which he identified an Ethereum address that had purchased “hundreds of thousands of dollars of tokens” exclusively listed on the Coinbase Asset Listing.
The purchase was made 24 hours prior to the actual announcement, pointing to a glaring case of market and price manipulation. While Cobie laughed it off, incredulous of any action Coinbase would do, he actually receives a reply from Coinbase’s chief security officer who said that the exchange was looking into the matter.
In the meantime, FBI’s investigation leading to the indictments issued by the Southern District of New York, the agency found that Nikhil and Sameer were granted access to internal communications channels used by Coinbase employees to communicate upcoming and future listings. Using this knowledge, the pair could make investment calls and use the info to purchase assets.
Investigators Believe They Have Sufficient Evidence
In May, the investigation began to wrap up and Coinbase summoned Wahi to the company’s office as part of its own probe. However, the former employee booked a flight to New Delhi instead but was stopped by law enforcement at the airport. He was carrying three large suitcases, numerous electronic devices, two passports, and hundreds of dollars of US currency.
Cobie tweeted to thank the FBI and DoJ for their hard work in uncovering what may very well be the first confirmed inside-trading job at a cryptocurrency company.
He was once again dismissive of any and all merit Coinbase may have had in the matter, arguing that the exchange knew about the issues for a long time but had chosen not to act. He said that Coinbase trying to claim credit and be the hero was not something he would ever recognize. The offenses may fetch each defendant up to 20 years in prison if found guilty.