In the first insider trading case involving cryptocurrencies, a former product manager at Coinbase Global and two other individuals have been charged with wire fraud, according to US authorities in Manhattan on Thursday.
Insider Trading Case
Ishan Wahi, the product manager at the cryptocurrency exchange, and his brother, Nikhil Wahi, were arrested on Thursday in Seattle. They and a third defendant, their friend Sameer Ramani, also face related U.S. Securities and Exchange Commission civil charges. Ramani is at large.
Ishan Wahi’s attorneys claimed in a statement that he is “innocent of all wrongdoing and plans to vigorously defend himself.” Requests for a response from Nikhil Wahi’s counsel were unanswered right away. A lawyer for Ramani could not be found right away by Reuters.
Ishan Wahi allegedly divulged sensitive information about upcoming announcements of new cryptocurrency assets that Coinbase will permit users to trade on its exchange.
They added that after being called in for a meeting by a Coinbase security director, Ishan Wahi purchased a one-way ticket to India. According to authorities, law enforcement prevented him from boarding the flight on May 16.
Ishan Wahi’s bail was set at $1 million and he was told to turn in his passports at his initial court appearance in Seattle federal court. Despite his apparent attempt to elude capture, the prosecution did not request that he be held. On August 2, he will make his next court appearance in Manhattan.
The SEC declined to comment on whether it would take legal action against Coinbase for listing the coins described in the complaint as securities, stating only that its investigation was still ongoing.
Prosecutors claim that Wahi and Ramani bought the assets using ethereum blockchain wallets and traded at least 14 times before Coinbase made its disclosures in June 2021 and April 2022, making at least $1.5 million in illegal gains.
“Fraud is fraud, whether it occurs on the blockchain or on Wall Street,” Damian Williams, the U.S. Attorney in Manhattan, said in a statement.
Philip Martin, Coinbase‘s chief security officer, said the company had shared findings with prosecutors from an internal investigation into the trading.
“We are committed to doing our part to ensure that all market participants have access to the same information,” Martin wrote on Twitter.
