Ex-Coinbase Manager Sentenced in “First Ever” Crypto Insider Trading Case

Ishan Wahi was sentenced to two years in prison for allegedly “tipping his associates regarding crypto-assets that were going to be listed on Coinbase Exchanges.”

Damian Williams, the United States Attorney for the Southern District of New York, announced “that ISHAN WAHI, a former product manager at Coinbase Global, Inc., was sentenced by U.S. District Judge Loretta A. Preska to two years in prison for providing Coinbase’s confidential business information about upcoming Coinbase crypto asset listings to his brother and his friend so that they could place profitable trades in advance of Coinbase’s listing announcements.”

WAHI previously “pled guilty to two counts of conspiracy to commit wire fraud.”

U.S. Attorney Damian Williams said:

“Ishan Wahi – a former Coinbase product manager – violated the trust placed in him by his employer by tipping others with valuable confidential information regarding Coinbase’s planned token listings. Today’s sentence should send a strong signal to all participants in the cryptocurrency markets that the laws decidedly do apply to them. The Southern District of New York will hold those who engage in insider trading to full account, regardless of whether their illegal conduct occurs in the equity markets or in the market for crypto assets.”

According to the allegations in the Indictment and statements made in public court proceedings:

At all relevant times, Coinbase was “one of the largest cryptocurrency exchanges in the world. Coinbase users could acquire, exchange, and sell various crypto assets through online user accounts with Coinbase.”

Periodically, Coinbase “added new crypto assets to those that could be traded through its exchange, and the market value of crypto assets typically significantly increased after Coinbase announced that it would be listing a particular crypto asset.”

Accordingly, Coinbase had “kept such information strictly confidential and prohibited its employees from sharing that information with others, including by providing a “tip” to any person who might trade based on that information.”

Beginning in approximately October 2020, ISHAN WAHI had “worked at Coinbase as a product manager assigned to a Coinbase asset listing team.”

In that role, WAHI was “involved in the highly confidential process of listing crypto assets on Coinbase’s exchanges and had detailed and advanced knowledge of which crypto assets Coinbase was planning to list and the timing of public announcements about those crypto asset listings.”

On multiple occasions “between June 2021 and April 2022, WAHI violated his duties of trust and confidence to Coinbase by providing confidential business information that he learned in connection with his employment at Coinbase to Nikhil Wahi and Sameer Ramani so that they could secretly engage in profitable trades around public announcements by Coinbase that it would be listing certain crypto assets on Coinbase’s exchanges.”

Following Coinbase’s public listing announcements, “on multiple occasions, Nikhil Wahi and Ramani sold the crypto assets for a profit.”

On April 12, 2022, “a Twitter account that is well known in the crypto community tweeted regarding an Ethereum blockchain wallet ‘that bought hundreds of thousands of dollars of tokens exclusively featured in the Coinbase Asset Listing post about 24 hours before it was published.’”

The trading activity “referenced in the April 12 tweet was trading previously conducted by Ramani based on tips provided by WAHI.”

Coinbase thereafter publicly “replied on Twitter, noting that it had already begun investigating the matter and, a few weeks later, stated in a public blog post that any Coinbase employee who leaked confidential company information would be “immediately terminated and referred to relevant authorities (potentially for criminal prosecution).”

On May 11, 2022, Coinbase’s director of security operations “emailed WAHI to inform him that he should appear for an in-person meeting relating to Coinbase’s asset listing process at Coinbase’s Seattle, Washington, office on May 16, 2022.”

WAHI confirmed he “would attend the meeting.”

On the evening of May 15, 2022, WAHI purchased “a one-way flight to India that was scheduled to depart the next day shortly before WAHI was supposed to be interviewed by Coinbase.”

In the hours “between booking the flight and his scheduled departure, WAHI called and texted Nikhil Wahi and Ramani about Coinbase’s investigation and sent both of them a photograph of the messages he had received on May 11, 2022, from Coinbase’s director of security operations.”

Prior to boarding the May 16, 2022, flight to India, WAHI “was stopped by law enforcement and prevented from leaving the country.”

In addition to the prison sentence, ISHAN WAHI, 32, of Seattle, Washington, “was ordered to forfeit various crypto assets that he received in connection with the scheme.”

Mr. Williams praised “the investigative work of the Federal Bureau of Investigation.”

He also “acknowledged the assistance of the Justice Department’s National Cryptocurrency Enforcement Team, as well as that of the Securities and Exchange Commission, which separately initiated civil proceedings against WAHI.”

This case is being “handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Noah Solowiejczyk and Nicolas Roos are in charge of the prosecution.”



Sponsored Links by DQ Promote