A former Product Manager at Coinbase and two others are charged with insider trading by the US Department of Justice (DOJ). The DOJ noted this is the first insider trading charge related to crypto. The indictment comes amid further regulation for cryptocurrency in the United States. Here’s what you need to know about the former Coinbase employee’s insider trading indictment.
Ex-Coinbase employee indicted for insider trading
Ishan Wahi, a one-time Product Manager at DeFi exchange Coinbase, and two accomplices allegedly committed insider trading. Wahi was part of Coinbase’s asset listing team. As part of this team, he had access to confidential information about future listings on the DeFi exchange. The DOJ alleges Waki used this information to make at least 25 illegal trades for a gain of about $1.5 million.
Wahi allegedly shared insider knowledge with his brother, Nikhil, and friend Sameer Ramani. The trio would purchase cryptocurrencies before their public listing on Coinbase and sell them afterward for a profit.
The DOJ charged Ishan Wahi with two counts of wire fraud conspiracy and two counts of wire fraud. In addition, they charged his younger brother, Nikhil, and Ramani with one count of both wire fraud conspiracy and wire fraud. Each charge has a maximum sentence of 20 years in federal prison. The Securities Exchange Commission (SEC) also filed charges against the trio.
How they were allegedly caught
Wahi and company allegedly purchased several hundred thousand dollars worth of cryptocurrencies a day before Coinbase listings went live. Cobie, a popular crypto Twitter influencer, took notice and tweeted at the company. They shortly responded an investigation was underway.
Coinbase’s Director of Security notified the elder Wahi brother he should attend a meeting regarding the company’s asset listing process. Wahi said he’d be there but purchased a one-way ticket to India instead and warned his brother and friend. However, law enforcement stopped him before he could flee the country. Law enforcement arrested both Wahi brothers on July 21. However, Ramani remains at large.
Coinbase’s response to the insider trading charges
After Coinbase’s internal investigation began, they published a Medium post authored by Coinbase CEO Brian Armstrong with further details. They updated the post after the DOJ filed charges. “Coinbase takes allegations of improper use of company information very seriously, as demonstrated by our rapid investigation of this matter,” reads the post. “Again, we have zero tolerance for this kind of misconduct and will not hesitate to take action against any employee when we find wrongdoing.”
Armstrong supported the DOJ’s indictment. But then said the SEC’s charges “are an unfortunate distraction” as no asset listed on the DeFi exchange is considered a security. Though the SEC Chair, Gary Gensler, recently implied all cryptocurrencies other than Bitcoin are securities.
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