Former Coinbase Product Manager, Ishan Wahi, has been sentenced to two years in prison after being charged with the US’s first-ever cryptocurrency insider trading case.
Wahi was found guilty of tipping off his brother and friend about confidential information related to upcoming token listings at Coinbase. This information enabled Wahi’s brother, Nikhil Wahi, and friend, Sameer Ramani to make more than $1.1 million from trading ahead of Coinbase’s public announcements, according to the US Securities Regulator.
The US Department of Justice charged the three individuals in July 2022 with conspiracy to commit wire fraud. Ishan Wahi’s sentencing was announced by the DOJ on 9th May, and he was sentenced by US District Judge Loretta Preska.
US Attorney Damian Williams said:
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.
Coinbase, the largest cryptocurrency exchange in the United States, required its employees who had access to confidential information about its planned new crypto asset listings to keep the information secret. Ishan Wah, who started work at Coinbase in October 2020, breached this trust by sharing confidential information with his brother and friend.
Prosecutors noted that Coinbase began investigating the case on 12 April 2022, after a tweet referred to trading previously done by Ramani based on a tip off from Ishan Wahi. The tweet was about 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.”
According to the court filings, Coinbase invited Wahi for an in-person meeting related to its asset listing process, but instead, he booked a one-way flight to India and was due to depart hours before he was to appear at the meeting venue on 16 May 2022.
DOJ explained that during the time between booking the flight and its departure, Wahi called and texted his brother and his friend about the investigation and send them a picture of the messages he had received from Coinbase’s director of security operations on 11 May 2022.
Wahi was arrested on 16 May 2022, before he could board the flight to India. In addition to his sentence, he was also ordered to surrender various crypto assets he received in connection with the insider trading scheme. The fate of his co-conspirators, Nikhil Wahi and Sameer Ramani, remains unknown.
