Former Coinbase manager faces insider trading charges, Three Arrows founders reveal ties to Terra

Yahoo Finance Live examines the ongoing insider trading charges against a former Coinbase employee and the connections Three Arrows founders revealed to have with the Terra ecosystem.

Video transcript

RACHELLE AKUFFO: Now, the Justice Department yesterday charged ex-Coinbase product manager, Ishan Wahi, his brother, and a friend with wire fraud charges. Now, the three allegedly used information on pending token listings, making about $1.5 million through illegal trades in at least 25 different crypto assets.

Meanwhile, founders of the bankrupt crypto hedge fund Three Arrows Capital, or 3AC, making headlines after two of the founders denied allegations of pulling money out before the company went under. The team did, however, reveal that they had close ties with Terra founder Do Kwon. Now, co-founders Su Zhu and Kyle Davis cited overexposure to Terra, staked Ethereum and Grayscale Bitcoin Trust for 3AC's downfall.

Now, Zhu also told Bloomberg he wasn't surprised at the bankruptcy, saying they position themselves for a kind of market that didn't end up happening. And Davis even added, we believed in everything to the fullest. So, Jared, I mean, it's hard to find someone who believes more than a crypto investor. I mean, they're all in at this point. So Jared, what's your take on this?

JARED BLIKRE: Yeah, you've got to love the maximalist attitude. But I want to go to the YFi Interactive because I'm seeing a lot of parallels to other times in history. This is a brand new asset class, which is having its come to God meeting. And Joe Weisenthal just did a podcast the other day with @jason, VC guy with half a million followers-- got to get caught up in that. But he says, so in perfect timing with the SEC news today, here's @jason in today's episode savaging VCs, who invested in crypto tokens and promoted what he sees as unregistered securities to retail.

And here's what-- this is a transcript from that podcast, saying, so, crypto has created an entire shadow in my mind in illegal stack that is skirting securities regulations. I believe the overwhelming majority of tokens are securities, but they're being dumped onto retail investors. And this is being done explicitly by venture firms.

So in conclusion here, this all reminds me of the 1920s, the speculative mania that led up to the Great Depression, possibly the 1860s, thinking railroad. I'm not saying we're going to have a Great Depression in crypto, but there are some parallels here.