Former Coinbase Insider Pleads Guilty In First-Ever Cryptocurrency Insider Trading Case | USAO-SDNY

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Dami­an Williams, the Unit­ed States Attor­ney for the South­ern Dis­trict of New York, announced today that ISHAN WAHI, a for­mer prod­uct man­ag­er at Coin­base Glob­al, Inc. (“Coin­base”), pled guilty to two counts of con­spir­a­cy to com­mit 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.  WAHI was arrest­ed and charged in July 2022 and pled guilty ear­li­er today before U.S. Dis­trict Judge Loret­ta A. Preska.

U.S. Attor­ney Dami­an Williams said: “Ishan Wahi – a for­mer Coin­base prod­uct man­ag­er – admit­ted in court today that he tipped oth­ers regard­ing Coinbase’s planned token list­ings so that they could trade in cryp­to assets for a prof­it.  Wahi is the first insid­er to admit guilt in an insid­er trad­ing case involv­ing the cryp­tocur­ren­cy mar­kets.  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 South­ern Dis­trict of New York has decades of expe­ri­ence pur­su­ing insid­er trad­ing cas­es, and we will con­tin­ue to use our exper­tise to pros­e­cute this crime no mat­ter what form it takes and where it occurs.”

Accord­ing to the alle­ga­tions in the Indict­ment and state­ments made in pub­lic court proceedings:

At all rel­e­vant times, Coin­base was one of the largest cryp­tocur­ren­cy exchanges in the world.  Coin­base users could acquire, exchange, and sell var­i­ous cryp­to assets through online user accounts with Coin­base.  Peri­od­i­cal­ly, Coin­base added new cryp­to assets to those that could be trad­ed through its exchange, and the mar­ket val­ue of cryp­to assets typ­i­cal­ly sig­nif­i­cant­ly increased after Coin­base announced that it would be list­ing a par­tic­u­lar cryp­to asset.  Accord­ing­ly, Coin­base kept such infor­ma­tion strict­ly con­fi­den­tial and pro­hib­it­ed its employ­ees from shar­ing that infor­ma­tion with oth­ers, includ­ing by pro­vid­ing a “tip” to any per­son who might trade based on that information.

Begin­ning in approx­i­mate­ly Octo­ber 2020, ISHAN WAHI worked at Coin­base as a prod­uct man­ag­er assigned to a Coin­base asset list­ing team.  In that role, 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. 

On mul­ti­ple occa­sions between June 2021 and April 2022, WAHI vio­lat­ed his duties of trust and con­fi­dence to Coin­base by pro­vid­ing con­fi­den­tial busi­ness infor­ma­tion that he learned in con­nec­tion with his employ­ment at Coin­base to Nikhil Wahi and Sameer Ramani so that they could secret­ly engage in prof­itable trades around pub­lic announce­ments by Coin­base that it would be list­ing cer­tain cryp­to assets on Coinbase’s exchanges.  Fol­low­ing Coinbase’s pub­lic list­ing announce­ments, on mul­ti­ple occa­sions, Nikhil Wahi and Ramani sold the cryp­to assets for a profit. 

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 trad­ing pre­vi­ous­ly con­duct­ed by Ramani based on tips pro­vid­ed by WAHI.  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).”  On May 11, 2022, Coinbase’s direc­tor of secu­ri­ty oper­a­tions emailed WAHI to inform him that he should appear for an in-per­son meet­ing relat­ing to Coinbase’s asset list­ing process at Coinbase’s Seat­tle, Wash­ing­ton, office on May 16, 2022.  WAHI con­firmed he would attend the meeting.

On the evening of May 15, 2022, WAHI pur­chased a one-way flight to India that was sched­uled to depart the next day short­ly before WAHI was sup­posed to be inter­viewed by Coin­base.  In the hours between book­ing the flight and his sched­uled depar­ture, WAHI called and texted Nikhil Wahi and Ramani about Coinbase’s inves­ti­ga­tion and sent both of them a pho­to­graph of the mes­sages he had received on May 11, 2022, from Coinbase’s direc­tor of secu­ri­ty oper­a­tions.  Pri­or to board­ing the May 16, 2022, flight to India, WAHI was stopped by law enforce­ment and pre­vent­ed from leav­ing the country.

*                *                *

ISHAN WAHI, 32, of Seat­tle, Wash­ing­ton, pled guilty to two counts of con­spir­a­cy to com­mit wire fraud, which each car­ry, respec­tive­ly, a max­i­mum sen­tence of 20 years in prison.

 The statu­to­ry max­i­mum sen­tence is pre­scribed by Con­gress and is pro­vid­ed here for infor­ma­tion­al pur­pos­es only, as any sen­tenc­ing of the defen­dant will be deter­mined by a judge.  WAHI is sched­uled to be sen­tenced by Judge Pres­ka on May 10, 2023, at 12:00 p.m.

Mr. Williams praised the inves­tiga­tive work of the Fed­er­al Bureau of Inves­ti­ga­tion.  He also acknowl­edged the assis­tance of the Jus­tice Department’s Nation­al Cryp­tocur­ren­cy Enforce­ment Team, as well as that of the Secu­ri­ties and Exchange Com­mis­sion, which sep­a­rate­ly ini­ti­at­ed civ­il pro­ceed­ings against WAHI.

This case is being han­dled by the Office’s Secu­ri­ties and Com­modi­ties Fraud Task Force.  Assis­tant U.S. Attor­neys Noah Solowiejczyk and Nico­las Roos are in charge of the prosecution.

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