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Hmm. Is this actually "insider" knowledge? I personally question the validity of this charge. This employee had knowledge of what COINBASE was going to do wi

Hmm. Is this actually "insider" knowledge? I personally question the validity of this charge. This employee had knowledge of what COINBASE was going to do with the currency (ie, list it). He had no fiduciary responsibility as pertaining to the coin itself. This is like knowing that Warren Buffer is going to say good thing about Microsoft tomorrow, and buying it today as a result (expecting it to rise). Is that actually illegal?

modeless 4y ago
It's not confirmed to be illegal until they get a conviction. So we will find out! It will be an interesting case. I'd wager they do get convicted but we'll see.
- gizmo686 4y ago
  There are two seperate questions: 1) Do the alledged facts meet the legal requirements for the crimes charged? 2) Are the alledged facts true? A trial is focused on question 2. A jury is called on to make a determination of the facts of the case, they will be instructed on what is/isn't illegal and not expected to make any decision regarding questions of law. Question 1 can be answered in summary judgment before you ever call a jury. Question 1 can also be answered through the appeals process long after a guilty verdict is given.
  - toolz 4y ago
    A jury can decide if something _should_ be illegal and base their verdict on that. Meaning that the jury is also considering point 1 and whether this specific case should be illegal, regardless of how clear the law is on the subject.
- skc 4y ago
  Does the fact that he tried to flee have any bearing on this or can it plausibly be argued away is irrelevant?
  - modeless 4y ago
    Beats me, I'm no lawyer. But it seems plausible to me that his intention was to avoid or at least delay getting fired rather than intentionally fleeing law enforcement specifically.
ayewo 4y ago
You need to remember that Coinbase is a regulated entity like other financial institutions and TFA clearly mentions that the insider was part of a small set of employees that had access to info that the rest of the employees did not have access to: > Beginning at least in August 2021 and continuing through May 2022, ISHAN WAHI was a member of a private Coinbase messaging channel reserved for a small number of Coinbase employees with direct involvement in the Coinbase asset listing process. The private channel was used to discuss, among other things, “exact announcement / launch dates + timelines” that Coinbase did not wish to share with all of its employees.
hef19898 4y ago
If your knowledge is privileged an non public, and might reasonably impact share prices either way, yes it is illegal. Not a lawyer, but your Buffet example above would be something I'd either run through compliance before traiding or I just wouldn't trade at all before said whatever he planned to say. Source: Countless of SOX-mandatory insider trading trainings and falling under rules covering restricted traiding windows at US listed companies.
- prepend 4y ago
  > If your knowledge is privileged an non public, and might reasonably impact share prices either way, yes it is illegal. Unless you’re in the US Congress as there is an exception for their legislative insider info.
  - hef19898 4y ago
    Rank and its privileges. It helps if you can make your own rules I guess...
  - yjftsjthsd-h 4y ago
    Okay, so obvious question: Is it legal for random Joe on the street to find out what trades congresspeople are making and mirror them?
    - prepend 4y ago
      If I remember my minimal insider trading training it’s legal if you aren’t an insider. So the example I remember is if you overhear insiders talking in an elevator and trade, that’s legal. If they tell you, that’s illegal. There are people who mirror the disclosures of trades from Pelosi and others. But by then it’s not possible to realize all the gains.
seanhunter 4y ago
Your Warren Buffet example would absolutely be illegal. Trading on the basis of material non-public price-sensitive information or tipping someone off so they trade is market abuse (ie illegal) in Europe. In the US, the rules are a little more complex but basically yes it is illegal (if that's what he did). You absolutely don't have to have fiduciary responsibility, and you don't have to be an official insider, you simply have to trade on the basis of material non-public price-sensitive information in a product that's covered by the regulations or give that price-sensitive information to someone else in the form of a tip (with some expectation in the US of benefitting iirc).
- soperj 4y ago
  The only instance where this isn't illegal is if you're a part of congress or the federal reserve.
- rblatz 4y ago
  Then what about groups that do short reporting, they do an investigation into a company, take a short position, then release that information to the public? It sounds like that would fall under your definition.
  - seanhunter 4y ago
    The research they did would be obtainable from public sources rather than being classified as material non-public. That said, if you worked for (say) Pershing Square and knew Bill Ackman was about to announce a short in some stock and you traded it is your personal account that would absolutely be illegal.
- vageli 4y ago
  This article [0] seems at odds with your statement. > Dirks v. SEC, 463 U.S. 646 (1983) was a pivotal U.S. Supreme Court decision regarding this type of insider trading. In Dirks, the Court held that a prosecutor could charge tip recipients with insider trading liability if the recipient had reason to believe that the information’s disclosure violated another’s fiduciary duty and if the recipient personally gained from acting upon the information. Dirks also created the constructive insider rule, which treats individuals working with a corporation on a professional basis as insiders if they come into contact with non-public information. [0]: https://www.law.cornell.edu/wex/insider_trading https://www.law.cornell.edu/wex/insider_trading
nathanvanfleet 4y ago
Love to see crypto people discover laws the hard way.
tylersmith 4y ago
This has nothing to do with fiduciary duty. He defrauded Coinbase and is being charged for that. Deliberately misappropriating privileged information like that is absolutely a crime.

modeless 4y ago

It's not confirmed to be illegal until they get a conviction. So we will find out! It will be an interesting case. I'd wager they do get convicted but we'll see.

gizmo686 4y ago
There are two seperate questions: 1) Do the alledged facts meet the legal requirements for the crimes charged? 2) Are the alledged facts true? A trial is focused on question 2. A jury is called on to make a determination of the facts of the case, they will be instructed on what is/isn't illegal and not expected to make any decision regarding questions of law. Question 1 can be answered in summary judgment before you ever call a jury. Question 1 can also be answered through the appeals process long after a guilty verdict is given.
- toolz 4y ago
  A jury can decide if something _should_ be illegal and base their verdict on that. Meaning that the jury is also considering point 1 and whether this specific case should be illegal, regardless of how clear the law is on the subject.
skc 4y ago
Does the fact that he tried to flee have any bearing on this or can it plausibly be argued away is irrelevant?
- modeless 4y ago
  Beats me, I'm no lawyer. But it seems plausible to me that his intention was to avoid or at least delay getting fired rather than intentionally fleeing law enforcement specifically.

ayewo 4y ago

You need to remember that Coinbase is a regulated entity like other financial institutions and TFA clearly mentions that the insider was part of a small set of employees that had access to info that the rest of the employees did not have access to: > Beginning at least in August 2021 and continuing through May 2022, ISHAN WAHI was a member of a private Coinbase messaging channel reserved for a small number of Coinbase employees with direct involvement in the Coinbase asset listing process. The private channel was used to discuss, among other things, “exact announcement / launch dates + timelines” that Coinbase did not wish to share with all of its employees.

hef19898 4y ago

If your knowledge is privileged an non public, and might reasonably impact share prices either way, yes it is illegal. Not a lawyer, but your Buffet example above would be something I'd either run through compliance before traiding or I just wouldn't trade at all before said whatever he planned to say. Source: Countless of SOX-mandatory insider trading trainings and falling under rules covering restricted traiding windows at US listed companies.

prepend 4y ago
> If your knowledge is privileged an non public, and might reasonably impact share prices either way, yes it is illegal. Unless you’re in the US Congress as there is an exception for their legislative insider info.
- hef19898 4y ago
  Rank and its privileges. It helps if you can make your own rules I guess...
- yjftsjthsd-h 4y ago
  Okay, so obvious question: Is it legal for random Joe on the street to find out what trades congresspeople are making and mirror them?
  - prepend 4y ago
    If I remember my minimal insider trading training it’s legal if you aren’t an insider. So the example I remember is if you overhear insiders talking in an elevator and trade, that’s legal. If they tell you, that’s illegal. There are people who mirror the disclosures of trades from Pelosi and others. But by then it’s not possible to realize all the gains.

seanhunter 4y ago

Your Warren Buffet example would absolutely be illegal. Trading on the basis of material non-public price-sensitive information or tipping someone off so they trade is market abuse (ie illegal) in Europe. In the US, the rules are a little more complex but basically yes it is illegal (if that's what he did). You absolutely don't have to have fiduciary responsibility, and you don't have to be an official insider, you simply have to trade on the basis of material non-public price-sensitive information in a product that's covered by the regulations or give that price-sensitive information to someone else in the form of a tip (with some expectation in the US of benefitting iirc).

soperj 4y ago
The only instance where this isn't illegal is if you're a part of congress or the federal reserve.
rblatz 4y ago
Then what about groups that do short reporting, they do an investigation into a company, take a short position, then release that information to the public? It sounds like that would fall under your definition.
- seanhunter 4y ago
  The research they did would be obtainable from public sources rather than being classified as material non-public. That said, if you worked for (say) Pershing Square and knew Bill Ackman was about to announce a short in some stock and you traded it is your personal account that would absolutely be illegal.
vageli 4y ago
This article [0] seems at odds with your statement. > Dirks v. SEC, 463 U.S. 646 (1983) was a pivotal U.S. Supreme Court decision regarding this type of insider trading. In Dirks, the Court held that a prosecutor could charge tip recipients with insider trading liability if the recipient had reason to believe that the information’s disclosure violated another’s fiduciary duty and if the recipient personally gained from acting upon the information. Dirks also created the constructive insider rule, which treats individuals working with a corporation on a professional basis as insiders if they come into contact with non-public information. [0]: https://www.law.cornell.edu/wex/insider_trading https://www.law.cornell.edu/wex/insider_trading

nathanvanfleet 4y ago

Love to see crypto people discover laws the hard way.

tylersmith 4y ago

This has nothing to do with fiduciary duty. He defrauded Coinbase and is being charged for that. Deliberately misappropriating privileged information like that is absolutely a crime.