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HomeBusinessWatch: Three Charged in First Ever Cryptocurrency Insider Trading Tipping Scheme

Watch: Three Charged in First Ever Cryptocurrency Insider Trading Tipping Scheme

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Coinbase insider trading leads to 10 months in jail for Nikhil Wahi after his brother tipped him off about upcoming cryptocurrency listings on the platform.

According to Bloomberg and Reuters, Nikhil Wahi received prison time after pleading guilty to conspiracy to conduct wire fraud in what has been dubbed the first cryptocurrency-related insider trading case.

Wahi was charged with utilizing information obtained from his brother, a former project manager at Coinbase, to purchase coins before they were made available for purchase on the well-known exchange last summer. This earned him some $892,500, which, in accordance with the terms of his sentence, he will also have to repay in addition to serving 10 months in jail.

Beginning in October 2020, ISHAN WAHI worked at Coinbase as a product manager assigned to a Coinbase asset listing team. In that role, ISHAN WAHI was involved in the highly confidential process of listing crypto assets on Coinbase’s exchanges and 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.

 

Beginning at least in August 2021 and continuing through May 2022, ISHAN WAHI was a member of a private Coinbase messaging channel reserved for a small number of Coinbase employees with direct involvement in the Coinbase asset listing process.   The private channel was used to discuss, among other things, “exact announcement / launch dates + timelines” that Coinbase did not wish to share with all of its employees.

On at least 14 occasions beginning at least in June 2021 and continuing through April 2022, ISHAN WAHI knew in advance both that Coinbase planned to list particular crypto assets and the timing of Coinbase’s public announcements of those asset listings and misappropriated that Coinbase confidential information by tipping either his brother, NIKHIL WAHI, or ISHAN WAHI’s friend and associate, SAMEER RAMANI, so that they could place profitable trades in those crypto assets in advance of Coinbase’s public listing announcements.

The DOJ reports, “Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging ISHAN WAHI, a former product manager at Coinbase Global, Inc. (“Coinbase”), NIKHIL WAHI, and SAMEER RAMANI, with wire fraud conspiracy and wire fraud in connection with a scheme to commit insider trading in cryptocurrency assets by using confidential Coinbase information about which crypto assets were scheduled to be listed on Coinbase’s exchanges.

ISHAN WAHI’s Attempt to Flee the United States

On April 11, 2022, Coinbase announced that it was considering potentially listing dozens of crypto assets on its exchanges. Based on Coinbase confidential information provided by ISHAN WAHI, RAMANI caused multiple anonymous Ethereum blockchain wallets to purchase enormous quantities of at least six of the crypto assets that were to be included in Coinbase’s April 11, 2022, listing announcement.

Shortly after RAMANI traded in advance of Coinbase’s April 11 listing announcement, on April 12, 2022, a Twitter account that is well known in the crypto community tweeted regarding an Ethereum 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 trading activity referenced in the April 12 tweet was the trading caused by RAMANI.   Coinbase thereafter publicly replied on Twitter noting that it had already begun investigating the matter and a few weeks later stated in a public blog post that any Coinbase employee who leaked confidential company information would be “immediately terminated and referred to relevant authorities (potentially for criminal prosecution).”

ISHAN WAHI and NIKHIL WAHI were arrested this morning in Seattle, Washington and will be presented today in the United States District Court for the Western District of Washington.   SAMEER RAMANI was also charged told FBI Assistant Director Michael J. Driscoll said: “Although the allegations in this case relate to transactions made in a crypto exchange – rather than a more traditional financial market — they still constitute insider trading.   As alleged, the defendants made illegal trades in at least 25 different crypto assets and realized ill-gotten gains totaling approximately $1.5 million.   Today’s action should demonstrate the FBI’s commitment to protecting the integrity of all financial markets — both ‘old’ and ‘new. “As alleged in the Indictment unsealed in Manhattan federal court and remains at large.”

Source: Department of Justice

 

FTX and Alameda File Request to Freeze $450 Million in Robinhood Stock in New York Court

 

 

 

 

 

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