- A former Coinbase employee pleaded guilty to 2 counts of wire fraud, the first case of its kind.
- Ishan Wahi coordinated with his brother and another accomplice to get ahead of the new listings on Coinbase.
- The group made about $1.5 million in profit from 14 Coinbase ads, according to prosecutors.
A former Coinbase employee has pleaded guilty in the first cryptocurrency insider trading trial, weeks after his brother was sentenced in the same case.
The Department of Justice (DOJ) saying Ishan Wahi, a former product manager at the cryptocurrency exchange, pleaded guilty to two counts of conspiracy to commit wire fraud, by informing others about Coinbase's planned token listings for profit.
In January, Wahi's brother, Nikhil He was sentenced to 10 months in prison and was fined $892,500 after pleading guilty to one count of conspiracy to commit wire fraud.
The DOJ said that starting in October 2020, Ishan, 32, gave his brother Ishan and another accomplice, Sameer Ramani, information about Coinbase listings using his position in the company. The couple regularly made profits from trading on Coinbase.
The prosecutors argued in court records that the group made $1.5 million in profit from 14 Coinbase announcements, affecting at least 25 different crypto assets.
But his trades soon aroused suspicion. An April 12, 2022 tweet highlighted an Ethereum blockchain wallet โthat bought hundreds of thousands of dollars worth of tokens that appear exclusively on the Coinbase asset listing post about 24 hours before it went live.โ Coinbase Chief Security Officer answered that his team was already investigating the incident.
The Justice Department confirmed that this exchange came from Ramani, based on tips provided by Wahi.
The former Coinbase employee faces up to 20 years in prison for each count of conspiracy to commit wire fraud. He will be sentenced on May 10.
"Wahi is the first whistleblower to admit guilt in an insider trading case involving the cryptocurrency markets," US Attorney Damian Williams said.
"Whether it occurs in the stock markets or the crypto markets, the theft of sensitive business information for your own personal gain or the benefit of others is a serious federal crime."
