United States prosecutors have labeled this as the first insider trading case in cryptocurrency.
Ishan Wahi, a former product manager at Coinbase Global Inc., has admitted to two counts of conspiracy to commit wire fraud in a case that U.S. prosecutors have labeled as the first insider trading case involving cryptocurrency.
Ex-Coinbase manager pleads guilty in insider trading case https://t.co/i6fG3c3wHc pic.twitter.com/zKfjqnNpzT
— Reuters (@Reuters) February 7, 2023
According to a report by Reuters, the prosecutors claimed that Wahi disclosed private information to his brother Nikhil and friend Sameer Ramani, regarding imminent announcements of new digital assets that Coinbase would enable users to trade. The announcement later caused assets to rise in value, allowing Nikhil and Sameer Raman to generate illicit gains of at least $1.5 million. Nikhil Wahi and Ramani were charged with using Ethereum (ETH) blockchain wallets to acquire digital assets and trading before the Coinbase announcements.
“I knew that Sameer Ramani and Nikhil Wahi would use that information to make trading decisions,” Ishan Wahi admitted during Tuesday’s hearing in a Manhattan federal court. “It was wrong to misappropriate and disseminate Coinbase’s property,” he added.
As part of his plea deal, Ishan Wahi has agreed to be sentenced to between 36 and 47 months in prison. His sentencing hearing is scheduled for May 10. His brother Nikhil Wahi has already pleaded guilty and was sentenced to 10 months in prison, while Ramani remains at large. Coinbase reportedly shared its findings from an internal probe into the trading with the prosecutors.
Related: Crypto exchanges tackle insider trading after recent convictions
On Jan 10, Cointelegraph reported that Ishan Wahi’s brother Nikhil Wahi had been sentenced to 10 months in prison for wire fraud conspiracy charges. Nikhil Wahi pleaded guilty in September to initiating trades based on confidential information obtained from his brother, Ishan Wahi.
In Nikhil Wahi’s case, U.S. prosecutors proposed a prison sentence ranging from 10 to 16 months due to the fact that he profited nearly $900,000 from his illicit activities. However, his defense lawyers proposed an alternative outcome, contending that his driving force behind the offense was to repay his parents for his college education and that he had no previous criminal history.