Federals: the 1st case of insider trading on crypto-currencies traps 3
NEW YORK — A former Coinbase product manager and his brother, along with a Houston man, were charged Thursday in what federal authorities have described as the first case of U.S. government insider trading in cryptocurrency.
The brothers – Ishan Wahi and Nikhil Wahi – were arrested while Houston man Sameer Ramani remains at large, federal authorities said as they announced the unsealing of an indictment in federal court of Manhattan.
Authorities say Ishan Wahi, 32, was a product manager at Seattle-based Coinbase Global Inc., one of the world’s largest cryptocurrency exchanges, when he provided advice to Nikhil Wahi , 26, and their friend, Ramani, 33. charged with wire fraud and wire fraud conspiracy.
The indictment says Ishan Wahi was detained by law enforcement before boarding a May 16 flight to India and prevented from leaving the country. In the hours before the theft, he had called and texted his brother and Ramani to alert them to an investigation Coinbase was conducting, according to a statement.
Ishan Wahi purchased a one-way plane ticket to India in a “failed attempt to flee the United States” after agreeing to be interviewed for an internal investigation by Coinbase, according to the indictment.
U.S. Attorney Damian Williams said the prosecution represents the government’s first insider trading case involving the cryptocurrency markets. He said it was a reminder that cryptocurrency markets are not a lawless zone.
FBI New York Bureau Chief Michael Driscoll said the defendants collected around $1.5 million in illegal profits by trading at least 25 different crypto assets.
Lawyers representing Ishan Wahi said in an email to The Associated Press that their client is innocent and “intends to vigorously defend himself against these charges and in the SEC action.”
Messages seeking comment have been sent to other defense attorneys.
The Securities and Exchange Commission filed civil charges of insider trading against the men in federal court in Seattle.
The SEC said the charges were brought against the trio after they set up a trading plan ahead of several announcements regarding certain crypto assets that were going to be made available for trading on the Coinbase platform.
“As today’s case demonstrates, whether in stocks, options, crypto assets or other securities, we will justify our mission by identifying and combating insiders on securities everywhere we see them,” said Carolyn M. Welshhans, acting chief of the law enforcement division. Crypto assets and cyber unit.
The New York indictment said Ishan Wahi began working as a product manager on the asset listing team in October 2020. He said he provided advice on information confidential to his brother and friend from June 2021 to last April.
Brian Armstrong, Coinbase’s chief executive, said on Twitter and in a blog post on Thursday that the company launched an internal investigation in April “into possible asset anticipation shortly before listing on Coinbase.”
The indictment says the leader was publicly identified through a Twitter post in April to an account “well known in the crypto community, with hundreds of thousands of followers.”
Armstrong said the company gathered enough evidence, then fired Ishan Wahi and reported its findings on the three men to the Justice Department.
He added, “We will investigate and refer bad actors to law enforcement, and they will face real legal consequences, including jail time.”