Three people were arrested in July after Coinbase reported their suspicions to the authorities. One of those people was their own employee.
First Ever Crypto Insider Trading Accusation
The U.S. Department of Justice (DOJ) charged former Coinbase (COIN) product manager Ishan Wahi, his brother Nikhil Wahi and Sameer Ramani with wire fraud and insider trading on Thursday.
The DOJ alleged in a press release that Ishan Wahi shared information about what crypto assets Coinbase would list with Nikhil Wahi and/or Ramani prior to the actual listing. The Securities and Exchange Commission (SEC) also brought charges against the three tied to the same insider trading allegations.
In a statement, U.S. Attorney Damian Williams of the Southern District of New York noted this was the second insider-trading case in crypto the DOJ has brought.
Ishan Wahi allegedly shared information about at least 14 different listings at Coinbase. According to the DOJ’s press release, the defendants used anonymous Ethereum wallets and exchange accounts in other people’s names to buy at least 25 different cryptocurrencies and potentially make up to $1.5 million (though the SEC release put the figure closer to $1.1 million).
The cryptocurrencies traded include TRIBE, ALCX, XYO, GALA, ENS and POWR, among others, according to the release.
The DOJ’s indictment also referenced a Cobie tweet which identified an Ethereum address “that bought hundreds of thousands of dollars of tokens” on an asset listing post from Coinbase, before the exchange actually published it.
Coinbase itself is not being charged. According to the DOJ, the exchange was also investigating allegations of insider trading.
Brother Flips on Brother
Brother is pleading guilty and giving testimony against family member.
According to a new report by Reuters, Nikhil Wahi pleaded guilty to a wire fraud conspiracy charge during a virtual court hearing before U.S. District Judge Loretta Preska in Manhattan.
Nikhil and his brother, former Coinbase product manager Ishan Wahi, and their friend Sameer Raman, are all accused of trading crypto assets using top secret information from Coinbase.
Ishan allegedly told his brother and Ramani about which new crypto assets were to be supported by Coinbase, information that the firm keeps confidential since the price of newly listed tokens tends to go up.
The suspects then used different anonymous Ethereum (ETH) wallets to buy and trade crypto assets. Coinbase reported the scheme to the authorities following a tip.
Nikhil says he understands that he could be deported from the United States as a result of his guilty plea.
“I knew that it was wrong to receive Coinbase’s confidential information and make trades based on that confidential information.”
The Wahi brothers denied the charges during their arraignment last month, but Nikhil changed his plea following an agreement with prosecutors and is now slated to be sentenced in December. His brother did not change his plea and is scheduled to appear in court on March 22nd.
Featured Image: Shutterstock/Igor Faun
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