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Coinbase Tied Up in Insider Trading Charges Thanks to Former Employee

Coinbase - Coinbase Tied Up in Insider Trading Charges Thanks to Former Employee

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Coinbase (NASDAQ:COIN) is having a rough go as of late. The company, even as one of the largest exchange players in the world, is suffering from the bear market turn. And now, atop various budget cuts, program closures and hefty accusations of data mismanagement, a former employee is bringing COIN to the spotlight for yet another wrong reason. It appears an ex-product manager for the company used his role to participate in insider trading. It’s a first-ever event that Coinbase probably isn’t celebrating.

The market meltdown has hit Coinbase, even as it continues to process billions of dollars in transactions each day. A first peak into the volatility behind the scenes came as other exchanges began laying off masses of employees. While it hasn’t fired any employees, Coinbase did rescind all offers to its new hires. The news became extra controversial after allegations that the company promised not to rescind these offers just days prior.

This past week saw Coinbase building on these penny-pinching decisions when it axed its affiliate marketing program. Compounding with the rescission news, investors had begun speculating over whether Coinbase’s financial woes are bigger than it is letting on. To add salt to the wound, competing exchange Binance (BNB-USD) started its own affiliate marketing program very shortly after the announcement.

While not a testament to its financial issues, the company has suffered some damning accusations to boot. Investigative outlet The Intercept accused the company of selling geo-tracking data to U.S. Immigration and Customs Enforcement (ICE). The accusations add fuel to the blooming fire, and have kept the company on the defensive during the tumult.

Coinbase Suffering New PR Woes as Ex-Employee Charged With Insider Trading

Adding to the publicity dumpster fire, Coinbase is finding itself in, the company also has its name tied to some major news out of the Department of Justice (DOJ). An ex-employee allegedly used their role at the company to conduct insider crypto trading.

Ishan Wahi, once a product manager for the company, is one of three arrested by the DOJ today in the first ever charges related to cryptocurrency insider trading. Wahi, alongside his brother Nikhil Wahi and Sameer Ramani, worked together to buy cryptocurrency ahead of Coinbase listings. Prior to a listing’s announcement, Wahi would tip off his brother and Ramani. The two would buy the assets in order to reap the speculative gains the news would cause.

According to the DOJ press release, the three executed insider trades around 14 different listings on the exchange. These trades occurred between June 2021 and April 2022. While the Wahi brothers have been arrested in Seattle, Ramani remains at-large.

The news is a huge moment for crypto regulators; never before have insider crypto traders been caught and charged. U.S. Attorney Damian Williams calls the event “a further reminder that Web3 is not a law-free zone.” Williams adds that this first comes only a month after another first. Last month, the DOJ charged Le Ahn Traun with wire fraud and money laundering charges over his non-fungible token (NFT) rug pull scam.

On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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