Paper 34: Insider Trading
Fraud is fraud is fraud
Contents
Insider Trading - A Crazy Story
This Week in NFT World
Thought of the Week
Meme of the Week
Hi everyone, hope you are super well.
I just wanted to express my sincere thanks to all of you for reading this week (and the weeks past).
Sometimes we can get lost in numbers, hype, and comparing ourselves to others - and we don’t stop to think how far we have come and all we have achieved.
So today I just wanted to say thank you for being one of the 1,129 subscribers to this newsletter - I appreciate you all very much.
Have a great week!
B
1. Insider Trading - A Crazy Story
Insider trading is a problem in the world of crypto and NFTs.
This short piece today highlights how it happens, how it is uncovered, and what happens in the aftermath. (NB at this stage these are all allegations)
A) First, people with “inside information” make trades based on their insider knowledge (obviously). Why do people do this?
Greed? Ambition? Thinking they will never get caught? The thrill of potentially being caught? Maybe the fact they see so much of it in traditional markets as well as in crypto and NFTs and think “it’s not that bad if it’s everywhere, is it?”
The problem is “insider trading” is a defined term with respect to the law. What you think is “insider trading” when you see other people trading on information they have might not be the same as when you trade on the information you have.
In this case, it was a product manager at Coinbase, a huge cryptocurrency exchange. He held a very privileged position where information was highly confidential. (In these instances it is far more likely that “insider trading” can occur.”)
Ishan Wahi, plus his brother and friend, collectively traded shortly in advance of at least 14 separate Coinbase public listing announcements concerning at least 25 different crypto assets.
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.
B) So how did they get caught?
Cobie noticed.
So Coinbase investigated.
C) And it was all over.
(Not before an attempted escape!)
On May 11, 2022, Coinbase’s director of security operations emailed ISHAN WAHI to inform him that he should appear for an in-person meeting relating to Coinbase’s asset listing process at Coinbase’s Seattle, Washington office on Monday, May 16, 2022. ISHAN WAHI confirmed he would attend the meeting.
On the evening of Sunday, May 15, 2022, ISHAN WAHI purchased a one-way flight to India that was scheduled to depart the next day shortly before ISHAN WAHI was supposed to be interviewed by Coinbase. Prior to boarding the flight, ISHAN WAHI falsely told Coinbase employees that he had already departed for India when he had not. In the hours between booking the flight and his scheduled departure, ISHAN WAHI called and texted NIKHIL WAHI and RAMANI about Coinbase’s investigation, and sent both of them a photograph of the messages he had received on May 11, 2022, from Coinbase’s director of security operations. Prior to boarding the May 16, 2022 flight to India, ISHAN WAHI was stopped by law enforcement and prevented from leaving the country.
Why has this story resurfaced?
D) It is interesting how corporate accounts - or those who are connected to them - massage history for their own ends. (To be fair, most people do this, not just corporations.)
There emerged a suggestion this week that Cobie was only bringing this insider trading to the attention of the public because the sponsor of his podcast, Up Only, is FTX - a rival cryptocurrency exchange to Coinbase.
Cobie managed to pretty savagely correct that narrative.
What are the takeaways from all of this?
“fraud is fraud is fraud” - just because we are in a new industry, fraud will still be sanctioned and rules do apply
not enough knowledgeable people - governments, corporates, and others are not yet equipped with the brain talent to deal with this area fully, so most leadership and key information comes from within the space itself
as time passes, stories change - it becomes convenient over time for the past to be rewritten for the purpose of the the present, so it is wise to stay alive to this
probably don’t take on Cobie on twitter.com without proper reason
2. This Week in NFT World
RTFKT create Lebron James Clone-X - RTFKT, who were bought by Nike last year, updated the metadata of one of their Clone-X NFTs to include a “LBJ Beard” trait. This is a huge endorsement. It has led to some interesting speculation regarding an official Nike event taking place later this week where Drake and Ronaldo will be in attendance.
ENS Digits Continue To Fly Off Shelves - The Ethereum Naming Service (ENS) trend of buying and owning short digits is still on fire. 0.62.eth, 0.46.eth, and 022.eth sold for 45ETH, 34ETH, and 69ETH respectively. (Think of these like buying and owning very exclusive number plates which noone else can have - but they have the added utility of acting as your address to which you can receive NFTs/crypto)
Collector buys and then burns $300,000 AlphaCentauriKid art - @TheRealGVG purchased and then burned the below piece of AlphaCentauriKid art. They burned it 15 minutes after they bought it (!)
The NBA announce a multi-year partnership with Sorare - The NBA have plans to build an NFT based fantasy basketball game. Note, they have already released many NFTs via TopShot, and one additional project. Perhaps their focus shifts here now.
David Bowie Estate Will Release NFT collection - On September 13, the David Bowie Estate will unveil BOWIE ON THE BLOCKCHAIN — a first of its kind multiple artist NFT sale. Some of the artists featured include Defaced, Fewocious, Jake, Lirona, and Osinachi.
We spoke about all of this and more in this week’s episode #17 of NFT World.
3. Thought of the Week
If you want things to get done, you have to do it yourself.
Or pay people enough for them to do it on your behalf and to your standard.
I have always been confused as to why so many people in this space don’t get why politicians won’t become pro-crypto: their livelihoods depends on them being anti-crypto.
Realistically, their livelihoods depend on them having [insert opinion] the same as those who pay their salaries.
To think things will change WITHOUT reaching your hand into your pocket is naive. And the problem crypto faces is that some of its biggest/most vocal proponents are anti-government, so there is no centralising force to fund the pro-crypto narrative.
Enter Coinbase, who has stepped up to challenge the action taken against Tornado Cash, which I wrote about in Paper 30 - How To Be A Criminal in Crypto.
Tornado Cash in essence is code which allowed people to anonymise the movement of their on-chain funds - this was outlawed.
As @iamDCinvestor says, “users of public blockchains have a right to pursue privacy, and wanting to do so does not make someone a criminal”.
4. Meme of the Week
RIP The Queen.
Have a great week,
B
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Disclaimer: The content covered in this newsletter is not to be considered as investment advice. It is for informational and educational purposes only.
I hold some of the NFTs mentioned in these newsletters.
Love your work ser. Do keep it up 🔥