Indian American pleads guilty in first-ever crypto insider trading case

Cryptocurrency
Photo credit: Federal Trade Commission

Brother of ex-Coinbase manager pleads guilty to role in scheme generating $1.1 million in illicit profits

An Indian American charged in the first-ever cryptocurrency insider trading cases has pleaded guilty to a wire fraud conspiracy charge and faces a prison sentence between 10 to 16 months.

Nikhil Wahi, the brother of former Coinbase product manager Ishan Wahi, submitted the plea in New York federal court Monday, according to Damian Williams, the US attorney for the Southern District of New York.

Read: 3 Indians charged in $1.5 million cryptocurrency insider trading scheme (July 22, 2022)

The Wahi brothers and a third associate Sameer Ramani were charged in July with wire fraud conspiracy and wire fraud after the Securities and Exchange Commission alleged the three generated $1.1 million in profits using an insider trading scheme,

Nikhil Wahi, 26, of Seattle, Washington, who was arrested in July pled guilty before US District Judge Loretta A. Preska to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison. He is scheduled to be sentenced by Judge Preska on Dec 13.

“Less than two months after he was charged, Nikhil Wahi admitted in court today that he traded in crypto assets based on Coinbase’s confidential business information to which he was not entitled,” Williams said.

Noting that for the first time ever, a defendant has admitted his guilt in an insider trading case involving the cryptocurrency markets, Williams said Wahi’s guilty plea should serve as a warning to those who participate in the cryptocurrency markets.

According to court documents, Coinbase one of the largest cryptocurrency exchanges in the world, periodically added new crypto assets to those that could be traded through its exchange.

Coinbase kept such information strictly confidential and prohibited its employees from sharing that information with others, including by providing a “tip” to any person who might trade based on that information.

Read: Indian American indicted in cryptocurrency money laundering scheme (March 11, 2022)

As a product manager assigned to a Coinbase asset listing team since October 2020, Ishan Wahi, 32, was involved in the highly confidential process of listing crypto assets on Coinbase’s exchanges.

He had detailed and advanced knowledge of which crypto assets Coinbase was planning to list and the timing of public announcements about those crypto asset listings.

On multiple occasions between July 2021 and May 2022, after getting tips from Ishan Wahi as to which crypto assets Coinbase was planning to list on its exchanges, Nikhil Wahi used anonymous Ethereum blockchain wallets to acquire those crypto assets shortly before Coinbase publicly announced that it was listing these crypto assets on its exchanges.

Following Coinbase’s public listing announcements, on multiple occasions Nikhil Wahi sold the crypto assets for a profit.

To conceal his purchases of crypto assets in advance of Coinbase listing announcements, Nikhil Wahi used accounts at centralized exchanges held in the names of others, and transferred funds, crypto assets, and proceeds of their scheme through multiple anonymous Ethereum blockchain wallets.

Read: 2 Indians, friend charged in 1st crypto insider trading scheme: Official (July 22, 2022)

Nikhil Wahi also regularly created and used new Ethereum blockchain wallets without any prior transaction history in order to further conceal his involvement in the scheme.

Ishan Wahi has pleaded not guilty and is next scheduled to appear in court on 22 March 2023. Ramani, who was also charged, is at large.
Coinbase has said it shared with prosecutors its findings from an internal investigation into the trading.

Leave a Comment

Your email address will not be published.

*

This site uses Akismet to reduce spam. Learn how your comment data is processed.