Former product manager Ishan Wahi conspired to commit insider trading by taking advantage of confidential company information pertaining to crypto assets that were scheduled to be listed on Coinbase’s exchanges.
Not only that, but his position also gave him access to the timing of announcements for when such crypto assets were to be made public, according to the DOJ.
Wahi further admitted that he shared this information with others while his scheme was still active, so that they too could trade the soon-to-be listed crypto assets for a profit.
His brother, Nikhil Wahi, and Sameer Ramani were named as individuals involved in his insider trading conspiracy; the DOJ did not comment if there were any others with whom he shared confidential company information.
“Wahi is the first insider to admit guilt in an insider trading case involving the cryptocurrency markets,” said U.S. Attorney Damian Williams. “Whether it occurs in the equity markets or the crypto markets, stealing confidential business information for your own personal profit or the profit of others is a serious federal crime.”
The scheme was exposed in April last year, following a post from a Twitter account well-known in the crypto community. The tweet pertained to a blockchain wallet “that bought hundreds of thousands of dollars of tokens exclusively featured in the Coinbase Asset Listing post about 24 hours before it was published,” the DOJ said.
Coinbase soon after tweeted that it had begun an internal investigation into the matter. Company representatives then stated, in no uncertain terms, any employees found to be linked to the conspiracy would have their positions immediately terminated and they would be referred to the relevant authorities for potential criminal prosecution.
By May, Wahi had been informed by the company’s director of security operations that he had been identified for his role in the insider trading scheme.
This is the second black eye in as many months for Coinbase, which, at points in its history, has reigned as the most widely used crypto exchange platform by trading volume, boasting over 108 million customers worldwide.
In early January, Coinbase agreed to pay a US$100 million settlement fee following charges levied by the New York State Department of Financial Services. The company was found to have violated anti-money-laundering laws by not ensuring that its security protocols were kept up to code.
Wahi's guilty plea of two counts of conspiracy to commit wire fraud means that he could potentially face up to 40 years in prison.
