The brother of a former Coinbase product manager has been handed a ten month prison sentence in what's been called the first ever insider trading case involving cryptocurrency markets.
Nikhil Wahi, who pled guilty to conspiracy to commit wire fraud, made $900,000 after he bought coins before they were listed for sale on the popular exchange following a tip-off from his brother Ishan Wahi.
Wahi was arrested as he was boarding a one-way flight to India and was found to be carrying “three large suitcases, seven electronic devices, two passports, multiple other forms of identification, hundreds of dollars in US currency, financial documents, and other personal effects.
His brother, Ishan Wahi worked as a product manager assigned to a Coinbase asset listing team and, between August 2021 and May 2022, was a member of a private messaging channel reserved for a small number of employees with direct involvement in the 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.
According to prosecutors, on at least 14 occasions Wahi passed on this confidential information to either his brother or friend, Sameer Ramani. The three would then use anonymous Ethereum blockchain wallets to acquire crypto shortly before Coinbase publicly announced that it was listing or considering listing these assets on its exchanges.
The conspiracy was exposed by a Twitter user who noticed: “ETH address that bought hundreds of thousands of dollars of tokens exclusively featured in the Coinbase Asset Listing post about 24 hours before it was published.”
This prompted an investigation by Coinbase which led to an indictment by the US Department of Justice.
Alongside his prison sentence, Nickil Wahi has been ordered to pay back his ill-gotten gains and will likely be deported to India on his release.
Ishan Wahi has pleaded not guilty and is awaiting a date in court, while Sameer Ramani is still at large.