In the first ever case concerning insider trading in crypto-currency, the defendant pleaded guilty, reported the United States Department of Justice.
From July 2021 to May 2022, the defendant engaged in trading using inside information obtained from a former employee of Coinbase Global Inc. related to crypto-assets that were going to be listed on Coinbase.
Coinbase is one of the largest crypto-currency exchanges in the world. Coinbase users can acquire, exchange, and sell crypto-assets through online user accounts. Coinbase regularly added new crypto-assets to those that could be traded through its exchange. The process of preparing the list of crypto-assets that were going to be listed on Coinbase was strictly confidential. After Coinbase publicly announced that a particular crypto-asset was to be listed, its market value usually significantly increased.
The defendant’s malpractice consisted in acquiring crypto-assets using anonymous Ethereum blockchain wallets shortly before Coinbase announced that it was listing specific crypto-assets on its exchanges. Following Coinbase’s public listing announcement, the defendant disposed of the crypto-assets, making profit.
In their communication, the U.S. authorities emphasised they would make every effort to detect each sign of fraud on crypto-currency markets. The communication of the U.S. Department of Justice is available here.