
The brother of a former Coinbase product manager has pleaded guilty in a cryptocurrency insider trading case. According to the U.S. Department of Justice (DOJ), he faces up to 20 years in federal prison.
DOJ’s First Crypto Insider Trading Case
The U.S. Department of Justice (DOJ) announced Monday that Nikhil Wahi, brother of a former product manager at Coinbase Global Inc. (Nasdaq: COIN), “pleaded guilty to one count of conspiracy to commit wire fraud in connection with a scheme to commit insider trading in cryptocurrency assets.” The Justice Department calls it the “first cryptocurrency insider trading case.” Nikhil Wahi was arrested in July.
His brother, Ishan Wahi, worked at Coinbase as a product manager assigned to the cryptocurrency trading platform’s asset listing team as of October 2020.
The Justice Department explained that on multiple occasions between July 2021 and May 2022, Nikhil Wahi benefited from the use of “confidential Coinbase information about which crypto assets were scheduled to be listed on Coinbase.”
After receiving advice from his brother on what crypto assets Coinbase planned to list on its exchanges, Nikhil Wahi “used anonymous Ethereum blockchain wallets to acquire those crypto assets shortly before Coinbase publicly announced the listings,” the Justice Department detailed, elaborating:
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“Following Coinbase’s public listing announcements, on multiple occasions, Nikhil Wahi sold the crypto assets for profit.”
The Justice Department explained that to hide his purchases, Nikhil Wahi “used accounts on centralized exchanges held in the name of others, and transferred funds, crypto assets, and profits from his scheme through multiple anonymous Ethereum blockchain wallets.”
Nikhil Wahi “also regularly created and used new Ethereum blockchain wallets without any prior transaction history to further conceal his involvement in the scheme,” the Justice Department added, noting:
“Nikhil Wahi, 26, of Seattle, Washington, pleaded guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison.”
The U.S. Securities and Exchange Commission (SEC) also slapped the two brothers and their friend with insider trading charges. Nikhil Wahi and the friend “allegedly bought at least 25 crypto assets, at least nine of which were securities, and then usually sold them shortly after the ads to make a profit. The long-standing insider trading scheme generated illicit profits totaling more than $1.1 million,” the SEC detailed.
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