U.S. Charges Former Coinbase Employee in First Crypto Insider Trading Case

A former product manager at Coinbase global along with two others has been charged with wire fraud in the first insider trading case involving cryptocurrencies.

Ishan Wahi, the former product manager at cryptocurrency exchange Coinbase, and his brother Nikhil Wahi, are being charged “with wire fraud conspiracy and wire fraud in connection with a scheme to commit insider trading in cryptocurrency assets.” Mr. Wahi and his brother are being charged along their friend Sameer Ramani. Ishan Wahi allegedly tipped off his brother and friend “regarding crypto assets that were going to be listed on Coinbase exchanges.” The Wahi brothers were arrested in Seattle, Washington and plans are underway for them to be presented before the U.S. District Court for the Western District of Washington. Their accomplice Sameer Ramani has yet to be arrested and remains at large according to reports from Reuters. The charges were brought by the U.S. Attorney’s Office for the Southern District of New York in conjunction with the New York Field Office of the Federal Bureau of Investigation.

Wahi Had Prior Knowledge of Listings on Coinbase

Prosecutors said that Ishan Wahi shared confidential information about forthcoming announcements of new crypto assets that the exchange was about to list. Nikhil Wahi and Sameer Ramani ostensibly used Ethereum blockchain wallets to acquire assets and traded at least 14 times before Coinbase made announcements from June 2021 to April 2022, and allegedly generated $1.5 million in illicit gains. The charges read,

After getting tips from Ishan Wahi, Nikhil Wahi and Ramani used anonymous Ethereum blockchain wallets to acquire crypto assets shortly before Coinbase publicly announced that it was listing or considering listing these crypto assets on its exchanges. Following Coinbase public listing announcements, Nikhil Wahi and Ramani sold the crypto assets for a profit.

FBI assistant director Michael Driscoll said,

Although the allegations in this case relate to transactions made in a crypto exchange — rather than a more traditional financial market — they still constitute insider trading.

The U.S. Securities and Exchange Commission has also brought forward its own charges against the three, claiming that at least nine of the 25 assets the trio allegedly engaged in insider trading gained them $1.1 million.

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