Ishan Wahi was a former product manager at Coinbase and his brother, Nikhil Wahi pled guilty in a hearing on Monday to one count of conspiracy for committing wire fraud.
This was in relation to an alleged scheme of insider trading.
Insider trading
A statement was issued by the US Attorney’s Office in New York, which revealed that Nikhil Wahi had accepted trading crypto assets based on the confidential business information of Coinbase to which he had not been entitled.
According to Damien Williams, this was two months after he had been charged and it was a first for a defendant to accept their guilt in an insider trading case related to the crypto market.
Williams added that the guilty plea would be a strong reminder to people participating in the crypto market of the commitment of the Southern District of New York when it comes to policing frauds in the space.
Nikhil will be sentenced in December and it could see him spend about 20 years in prison. Williams revealed that the court had also ordered the return of funds that had been earned due to the illicit trading.
The case
The Justice Department had charged three people in July for wire fraud conspiracy, along with wire fraud pertaining to crypto insider trading.
These were Nikhil, his brother Ishan, and Sameer Ramani and the trio had also had charges filed against them by the Securities and Exchange Commission (SEC).
While working at the Coinbase crypto exchange, Ishan had access to upcoming listing announcements on the platform.
He had allegedly shared this information with his brother and Sameer in order to make profits through the listing. They bought the tokens before they were listed on the exchange.
Ishan’s case
It should be noted that while Nikhil may have accepted his guilt, Ishan had done the opposite when facing the charges of the Department of Justice.
Back in August, he had pled not guilty, so it is unclear how his case will move forward after his brother pled guilty and if he will continue to fight the insider trading charges.
Moreover, the statement from the DOJ also disclosed that Nikhil had implicated his brother by admitting that he got tips from Ishan.
Nikhil had kept his insider trading anonymous by using different crypto wallets that were opened in the names of other people.
Insider trading on crypto exchanges is a major concern and it is not just relevant to this case. However, the case is indeed the first one of its kind and would establish a precedent.
According to experts, 25% of the listings on the Coinbase crypto exchanges in the last four years had some degree of insider trading associated with them.
Last month, a report was also published which said that insider trading was a big problem at Coinbase and the academics behind it also alleged that it is ‘systemic’ in the crypto market.
Coinbase’s representative said that they have zero tolerance for such behavior and they continue monitoring and investigating any issues.
