Ex-Coinbase manager charged in crypto insider trading case • The Register

A now-former Coinbase executive, his brother and a friend were charged today with conspiracy to commit wire fraud and wire fraud in connection with the first-ever cryptocurrency insider trading scheme in the United States.

Ishan Wahi, a 32-year-old ex-product manager at Coinbase Global who lives in Seattle, Washington, and his 26-year-old brother Nikhil Wahi, also from Seattle, were arrested Thursday morning.

A third co-conspirator, 33-year-old Sameer Ramani, of Houston, Texas, remains at large.

The US Department of Justice and the FBI allege that the three men pulled out of a $1.5 million insider trading scheme by using confidential Coinbase information about which cryptoassets were slated to be listed on Coinbase’s exchanges.

It is alleged that Ishan Wahi tipped off his brother Nikhil and/or Ramani, who then bought the digital tokens under the assumption that their value would rise once they were listed.

In addition to the criminal charges, the US Securities and Exchange Commission filed a complaint [PDF] a separate insider trading complaint against the three men.

As a Coinbase product manager assigned to the financial giant’s asset listing team, Ishan Wahi was privy to advanced knowledge of which cryptocurrencies Coinbase planned to list, according to court records.

In addition, we’re told Wahi was a member of a private Coinbase messaging channel reserved for a select few employees with direct involvement in the asset listing process. This was used to discuss, among other things, “exact announcement/launch dates + timelines” that were not shared with the rest of the Coinbase staff.

Wahi knew this information was highly confidential, according to the indictment, but he allegedly passed it on to his brother and friend for their financial gain.

On “numerous occasions” starting around June 2021 and continuing through April 2022, Ishan Wahi knew in advance that Coinbase planned to list certain assets and he knew when the cryptocurrency exchange planned to make those listings public, prosecutors’ court documents allege.

He then allegedly “misappropriated this Coinbase confidential information” when he gave it to Nikhil Wahi and/or Sameer Ramani so they could pick up the tokens before the public listing and sell them at a profit later. These crypto assets are said to include: TRIBE, XYO, ALCX, GALA, ENS and POWR.

After receiving these confidential Coinbase details, Nikhil Wahi and Sameer Ramani allegedly used anonymous Ethereum blockchain wallets to acquire certain crypto assets before Coinbase announced anything publicly. According to an indictment:

Nevertheless, all good schemes must come to an end. And for the allegedly creepy trio, it came in April.

In early April, Ishan Wahi reportedly learned that Coinbase planned to announce that it was considering listing dozens of cryptoassets on its exchanges. As usual, he allegedly tipped off Ramani, who, we’re told, got several anonymous Ethereum blockchain wallets to buy large amounts of crypto assets to be included in Coinbase’s April 11 listing announcement.

However, on April 12, a Twitter account that the Feds describe as “well-known in the crypto community, with hundreds of thousands of followers,” tweeted about identifying an Ethereum wallet “that purchased hundreds of thousands of dollars worth of tokens exclusively featured in Coinbase Asset Listing posts approximately 24 hours before it was published.”

Coinbase responded via tweet and said it was investigating the matter.

Wahi is said to have tried to flee the United States

Court documents reveal that a month later, Coinbase’s director of security operations emailed Ishan Wahi to set up an in-person meeting related to the company’s asset listing process. After confirming he would be there, Wahi bought a one-way flight to India and alerted his brother and Ramani to Coinbase’s investigation, it is claimed.

However, before he boarded a flight on May 16, police stopped Wahi and prevented him from leaving the United States.

Ishan Wahi, who is no longer with Coinbase, is charged with two counts of conspiracy to commit wire fraud and two counts of wire fraud, each of which carries a maximum sentence of 20 years.

Nikhil Wahi is charged with one count of wire fraud conspiracy and one count of wire fraud, each of which carries a maximum sentence of 20 years.

Ramani is charged with one count of wire fraud conspiracy and one count of wire fraud, each of which carries a maximum sentence of 20 years.

“Today’s charges are a further reminder that Web3 is not a lawless zone,” US Attorney Damian Williams said in a statement. “Last month I announced the first ever insider trading case involving NFTs and today I announce the first ever insider trading case involving cryptocurrency markets.”

These criminal charges should send a clear message to thugs, he added. “Fraud is fraud is fraud, whether it happens on the blockchain or on Wall Street.” ®