The US Department of Justice charged three people, including a former employee of the Coinbase exchange, with insider trading. This is one of the first instances of insider trading in cryptocurrencies in history.
The charges are against former Coinbase product manager Ishan Wahi, his brother Nikhil Wahi and their mutual friend Sameer Ramani. The three are accused of wire conspiracy and wire fraud in connection with an insider trading scheme for cryptocurrencies.
Let me remind you that we also wrote that Former Amazon Employee Found Guilty of Hacking Capital One and Stealing Data from 100 Million People, and also that Avaya Support Employee Sold Pirated Licenses.
According to the authorities, the defendants used confidential information available only to Coinbase employees and knew in advance when certain cryptocurrencies would start trading on Coinbase. The scammers used the information they received to purchase the necessary tokens in advance, even before their rates began to rise, and after official announcements and price increases, they sold assets that had risen in price.
According to the investigation, from June 2011 to April this year, the Wahi brothers and their friend “earned” about $1.5 million in realized and unrealized profits. Ishan Wahi leaked non-public information about future Coinbase listings to his accomplices 14 times, and his data related to 25 different crypto assets.
It is worth noting that Nikhil Wahi and Samir Ramani, who carried out transactions on the tips of Ishan Wahi, took a number of steps to mask insider information and obfuscate the traces of money. Specifically, the indictment alleges numerous transfers to a wide range of cryptocurrency accounts, transfers of assets through anonymous wallets, and even the creation of accounts in other people’s names. The documents also emphasize that Wahi understood that the information was strictly confidential, but passed it on to his brother and friend for financial gain.
The investigation appears to have begun on April 12, 2022, when a Twitter user, described by authorities as “a well-known account in the cryptocurrency community with hundreds of thousands of followers,” wrote about the discovery of an Ethereum wallet that “spent hundreds of thousands of dollars on tokens, exclusively listed on the Coinbase Asset Listing approximately 24 hours prior to official release.” Then representatives of Coinbase responded to this tweet and said that they were investigating what had happened.
A month later, when Wahi was invited on the carpet to the head of security at Coinbase, he tried to flee the country and bought a one-way ticket to India, and also alerted his brother and Ramani that Coinbase was investigating. However, before boarding the flight, law enforcement stopped Wahi and prevented him from leaving the United States.
Now each of the three defendants faces up to 20 years in prison.
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