Coinbase Ex-Employee Pleads Guilty to Insider Trading
Feds Treating Digital Assets the Same as Stocks When it Comes to Confidential Information on Listings
By: Aleksandar Gilbert •Byte
A former Coinbase employee pleaded guilty Tuesday to insider trading charges, the U.S. Attorney’s Office for the Southern District of New York said Tuesday.
Ishan Wahi, 32, will be sentenced in May, after pleading guilty to two counts of conspiracy to commit wire fraud, according to prosecutors. His brother, Nikhil Wahi, was sentenced in January to 10 months imprisonment after pleading guilty to one count of conspiracy to commit wire fraud.
Jumped in Value
The case demonstrates that U.S. law enforcement authorities are treating digital assets the same as securities when it comes to laws governing confidential information around listing and trading. Insider trading cases involving stocks have long been a regular feature on the dockets of federal courts.
Ishan Wahi was a former product manager at Coinbase, the No. 1 listed cryptocurrency exchange based in the U.S. In a 22-page indictment, prosecutors alleged Ishan, Nikhil, and their friend Sameer Ramani used Ishan’s connections to find out which cryptocurrencies were scheduled to be listed on Coinbase.
The group then purchased the tokens and sold them after the information became public and pocketed profits after they jumped in value.
The Graph's Token Doubles in 24 Hours
GRT's Performance Evokes Heady Days of Bull Market Amid AI-Token RallyThe Defiant
The three men traded over 25 different crypto assets on at least 14 occasions and walked away with $1.5M in illicit profits, according to prosecutors. Using confidential information to profit from trading securities is illegal.
“Wahi is the first insider to admit guilt in an insider trading case involving the cryptocurrency markets,” U.S. Attorney Damian Williams said in a prepared statement. “Whether it occurs in the equity markets or the crypto markets, stealing confidential business information for your own personal profit or the profit of others is a serious federal crime.”
In the indictment, the Southern District of New York said the case had been brought to its attention by a “Twitter account that is well-known within the crypto community,” assumed to be crypto influencer Cobie. After Cobie’s April 12 tweet, Coinbase launched an investigation into the allegations of insider trading.
About a month later, Coinbase’s director of security operations told Wahi to appear for an in-person meeting “relating to Coinbase’s asset listing process” on May 16. Wahi bought a one-way ticket to India, but was stopped by law enforcement officers at the airport, according to the U.S. Attorney’s Office.