SDNY Announces First-Ever Crypto Insider Trading Guilty Plea

Tippee Pleads Guilty In First Ever Cryptocurrency Insider Trading Case

Damian Williams, the United States Attorney for the Southern District of New York, announced today that NIKHIL WAHI, the brother of a former product manager at Coinbase Global, Inc. (“Coinbase”), pled guilty to one count of conspiracy to commit wire fraud in connection with a scheme to commit insider trading in cryptocurrency assets by using confidential Coinbase information about which crypto assets were scheduled to be listed on Coinbase’s exchanges. WAHI was arrested in July of this year and pled guilty before U.S. District Judge Loretta A. Preska.

U.S. Attorney Damian Williams said: “Less than two months after he was charged, Nikhil Wahi admitted in court today that he traded in crypto assets based on Coinbase’s confidential business information to which he was not entitled. For the first time ever, a defendant has admitted his guilt in an insider trading case involving the cryptocurrency markets.

SEC Charges VMware with Misleading Investors by Obscuring Financial Performance

The Securities and Exchange Commission today charged VMware Inc. for misleading investors about its order backlog management practices, which enabled the Palo Alto, California-based technology company to push revenue into future quarters by delaying product deliveries to customers, concealing the company’s slowing performance relative to its projections.

The SEC’s order finds that, beginning in fiscal year 2019, VMware began delaying the delivery of license keys on some sales orders until just after quarter-end so that it could recognize revenue from the corresponding license sales in the following quarter. According to the SEC’s order, VMware shifted tens of millions of dollars in revenue into future quarters, building a buffer in those periods and obscuring the company’s financial performance as its business slowed relative to projections in fiscal year 2020. Although VMware publicly disclosed that its backlog was “managed based upon multiple considerations,” it did not reveal to investors that it used the backlog to manage the timing of the company’s revenue recognition.

An SEC Enforcement Program For Policing WEB3

The expanded Crypto Assets and Cyber Unit will leverage the agency’s expertise to ensure investors are protected in the crypto markets, with a focus on investigating securities law violations related to:

--Crypto asset offerings;

--Crypto asset exchanges;

--Crypto asset lending and staking products;

--Decentralized finance (“DeFi”) platforms;

--Non-fungible tokens (“NFTs”); and

--Stablecoins.

This Web3 regulatory awakening should come as no surprise. Given the growing laundry list of perilous Web3 externalities, dangerous Web3 societal costs, and potential systemic and calamitous Web3 financial consequences, the engagement of U.S. financial regulators, especially the SEC, was inevitable. But now what?

This article proposes a multi-faceted SEC Web3 enforcement program focusing on 1) aggressive enforcement, with sweeps, SWAT teams, and the use of expedited and omnibus formal orders; 2) heightened Web3 surveillance; 3) coordinated regulatory cooperation and law enforcement liaison efforts; 4) nationwide educational initiatives; and 5) incentivized self-policing.

Stock Trades Reported by Nearly a Fifth of Congress Show Possible Conflicts

These lawmakers — all of whom defended the transactions as proper — are among 97 current senators or representatives who reported trades by themselves or immediate family members in stocks or other financial assets that intersected with the work of committees on which they serve, according to an extensive analysis of trades from the years 2019 to 2021 by The New York Times.

The potential for conflicts in stock trading by members of Congress — and their choice so far not to impose stricter limits on themselves — has long drawn criticism, especially when particularly blatant cases emerge. But the Times analysis demonstrates the scale of the issue: Over the three-year period, more than 3,700 trades reported by lawmakers from both parties posed potential conflicts between their public responsibilities and private finances.

Voyager Bankruptcy Auction: Crypto Users Hope Frozen Accounts Get Unlocked

Customers with their life savings frozen on the insolvent crypto platform Voyager Digital Ltd. are looking to a bankruptcy auction Tuesday for clues on whether or not they’ll finally get their assets back.

Voyager users have been unable to access their cryptocurrencies since July 1, when the meltdown in digital assets forced the company to suspend trading, deposits and withdrawals. Now, Voyager has attracted enough interest from potential buyers to necessitate an auction. And while a higher sale price is a potentially positive sign for customers, it’s still unclear how much money they’ll ultimately recover.

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“We’re all on the edge of our seats at the moment waiting for the bids,” said 47-year-old Pilotte. “I didn’t think it would be trapped the way it is.”

Twitter v. Musk

The main point I want to make here is that this is very generalizable. If you know something bad about Twitter, or if you have been reading the merger agreement online and think there’s a clause of the agreement that Musk can use to get out of it, shoot him a tweet. If you’re right, or frankly if you’re wrong, his lawyers can put your claims into a letter and send it to Twitter saying “I know we’ve already terminated this agreement three times, but we’re doing one more.” Musk can terminate as often as he likes; if he terminates the agreement 100 times with 100 excuses and 99 of them are laughed out of court, but the 100th works, then that’s good enough for him.

The Search for Dirt on the Twitter Whistle-Blower

As the inquiries proliferated, the group of ex-Stripe employees began to believe, Wasserman told me, “that multiple different sources, multiple different people, multiple different companies, were all basically trying to dig up dirt on Mudge, all seemingly at the same time.” The firms, Provos surmised, were “trying to get information that could further discredit Mudge,” an effort that “seemed incredibly shady.” Jonathan Kaltwasser, Stripe’s former chief information security officer and a member of the Slack group, quickly alerted Zatko.

“My family and I are disturbed by what appears to be a campaign to approach our friends and former colleagues under apparently false pretenses with offers of money in exchange for information about us,” Zatko told me. “These tactics should be beneath whoever is behind them.”…

Blockchain Association Sets Up New Crypto Industry PAC

The Blockchain Association is adding its own political action committee to the crypto industry’s growing array of campaign-finance efforts seeking to steer the U.S. government’s debate over digital assets.

The BA PAC will contribute to the campaigns of “pro-crypto candidates” from both parties, according to Kristin Smith, the Washington-based association’s executive director. The timing – dated Monday in the group’s filing with the Federal Election Commission – is too late to make a splash in November’s midterm elections that will decide if Republicans will surge into power in Congress or whether Democrats will maintain their tenuous hold. But the PAC will be in a position to exert influence in the presidential election year in 2024.