This is going viral today: Three Charged In First Ever Cryptocurrency Insider Trading Tipping Scheme
This comes a day after I published my post yesterday about financial crime. The timing could not have been better.
From the indictment:
On at least 14 occasions beginning at least in June 2021 and continuing through April 2022, ISHAN WAHI knew in advance both that Coinbase planned to list particular crypto assets and the timing of Coinbase’s public announcements of those asset listings and misappropriated that Coinbase confidential information by tipping either his brother, NIKHIL WAHI, or ISHAN WAHI’s friend and associate, SAMEER RAMANI, so that they could place profitable trades in those crypto assets in advance of Coinbase’s public listing announcements.
“ISHAN WAHI” was arrested just a year after he began insider trading, so it’s not like it took the government a long time to make an arrest. This agrees with my overall thesis about how the government takes financial crime seriously, contrary to the popular belief that the SEC is ignoring insider trading or is asleep at the wheel. The blockchain also makes it very easy to track money flow.
The trio tried to hide the trail, to no avail:
To conceal their purchases of crypto assets in advance of Coinbase listing announcements, NIKHIL WAHI and RAMANI used accounts at centralized exchanges held in the names of others, and transferred funds, crypto assets, and proceeds of their scheme through multiple anonymous Ethereum blockchain wallets. NIKHIL WAHI and RAMANI also regularly created and used new Ethereum blockchain wallets without any prior transaction history in order to further conceal their involvement in the scheme.
Insider trading has to be among the worst crimes ever in terms of risk vs reward, because breaking securities law automatically makes it federal crime and not a state one, and also it leaves a long, permanent trail of electronic records. Also the tools to detect insider trading have become very advanced, such as automated pattern recognition and statistical analysis that can detect anything abnormal despite the best efforts to hide the trades. Crooks will try all sorts of methods to hide the trades, such as mixing up normal or random trades with informed trades, wash trading, breaking the trades into small pieces, trading ETFs that have large exposure to the chosen stock, using multiple accounts, relaying trades to a chain of accomplices, burner phones, encrypted chat apps, etc. and they still get caught. When insider trading suspected, your entire social network will be dug up, phones traced, etc. to find accomplices and link bank accounts with the trades. Having multiple accomplices exponentially increases the odds one of them will become an informant and blow the whole thing open.
Also Today Tesla stock surged 9% on yet another quarter of blow-out earnings. I was right two-fold: that Tesla stock would keep going up defying endless media predictions of bubble or crash, and that Tesla would outperform Bitcoin. Bitcoin is just digital air and just another toy for gamblers…Tesla is laying the global transportation and energy infrastructure for the next 100+ years for the future type 1 civilization. Cars are just scratching the surface of Tesla’s potential. Tesla will be worth $10 trillion soon and Elon Musk will be the world’s first trillionaire. No one cares if he is forced to buy Twitter or not. The huge success of Space-X and Tesla overshadows this. The media keeps looking for reason for Elon to fail, and no matter how hard they try he keeps coming out on top. He is possibly the most important and influential person alive now, maybe more so than Biden, Jerome Powell, or even the president of China. The Pope is possibly more influential, but he cannot do much. Biden is old, senile, sickly and ineffective. His major accomplishments are limited to giving money away, whether it’s gas rebates or stimulus, cause he has no power to legislate. Student loan forgiveness and the ‘billionaire tax’ both went nowhere, as predicted here.