Justice Department Announces Indictment and Arrest of Coinbase Manager and Two Others in Illegal Crypto Insider Trading Scheme

By Thomas J. McNamara, Esq.

 

The United States Justice Department has unsealed an indictment charging Ishan Wahi, a former product manager at Coinbase Global, Inc. and two others with a scheme to engage in insider trading in cryptocurrency assets by using confidential Coinbase information about which crypto assets were scheduled to be listed on Coinbase’s exchanges.  Ishan Wahi worked at Coinbase, one of the world’s largest cryptocurrency exchanges, as a product manager who had access to highly confidential information concerning which crypto assets were soon to be listed as available for trading on Coinbase exchanges.  The indictment alleges that Ishan Wahi shared this confidential information with his brother, Nikhil Wahi, and a friend Sameer Ramani.

Once “tipped” with this information, Nikhil Wahi and Sameer Ramani would buy these crypto assets shortly before the public announcement, and as a result, generated profits of at least 1.5 million dollars.  In an attempt to conceal their insider trading “tipping” scheme, Nikhil Wahi and Ramani used multiple anonymous Ethereum blockchain wallets, including those without any prior transaction history.  The indictment alleges that the insider trading took place on at least 14 separate occasions during the past year.  Someone on Twitter tweeted that an anonymous Ethereum blockchain wallet had bought hundreds of thousands of dollars of tokens which were then listed on the Coinbase exchange within 24 hours, triggering an investigation.

The defendants were charged with wire fraud and wire fraud conspiracy.  The Coinbase product manager, Ishan Wahi, was arrested shortly before attempting to board a flight on a one-way ticket to his native India.  The case is being prosecuted in the Southern District of New York.

Like in cases of securities insider trading, civil suits are sure to follow.

 

Thomas J. McNamara is a partner at the law firm of Certilman Balin Adler & Hyman, LLP.

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