Let's be clear here: connected people doubled their money overnight. There should be a special tax for insider-only capital gains like this.

I actually agree with that. They definitely knew the FB deal was in place when they agreed to the funding.

Totally agreed. Engineers at instagram worked days and nights for years for probably the same amount of money that the inside traders make overnight, literally.

You have got to imagine that the founders [who had the largest stake] made out better with this investment. It's likely the case that a smaller slice of a bigger $ pie > larger slice of smaller $ pie

The engineers would be in the same boat as the founders.

The insider VCs likely served to make the engineers richer. Facebook is likely the one who got screwed into overpaying.

Facebook only gets screwed if their own valuation doesn't increase enough to match the amount "overpaid" in response to Instagram's acute "increased valuation" ploy.

Given current market conditions, particularly in terms of fawning over Facebook, the negative effects of this ploy seem likely to be largely externalized, with the amount of burden borne by Facebook promising to be negligible. As usual in the trading game, the bulk of the burden will fall on the unanointed schmucks lacking the information to buy low and sell high.

Did you ever stop to think that insider traders may have spent endless nights building their companies, selling them for profit and are now simply taking that money to invest?

Money is simply a medium for exchange in this case.

Spending endless nights building and selling companies is laudable, and well rewarded already. "Taking that money to invest" is an entirely unrelated task and needs to be done on the same playing field the rest of the investing public has to play on.

You're saying essentially that the ethics of how you spend money change depending on how you got it. How can that logic possibly work?

And your point is?

Drug kingpins spend considerable effort building their operations, often at considerable risk to their own safety.

Does that risk and hard work mean that we should simply accept their corrupt activity and influence?

Corruption is corruption.

Is it really "investing" in this case? What was being exchanged besides pure profit?

What makes you say that? (The article contradicts you, for what that's worth).