Former Coinbase employee pleads guilty to insider trading

A former employee of cryptocurrency exchange Coinbase pleaded guilty on Tuesday to insider trading, the first time a crypto industry insider has admitted attempting to profit from confidential information.

The case has been closely followed in the crypto industry since the accusations against Ishan Wahi, a former product manager Coinbase, were filed in July in federal court in the Southern District of New York. By cracking down on insider trading at a major exchange, feds have signaled their willingness to prosecute the freewheeling crypto industry for the same type of malfeasance that occurs in traditional financial markets.

Mr. Wahi, who admitted two counts of conspiracy to commit wire fraud, is expected to be sentenced on May 10. Each count carries a maximum sentence of 20 years in prison, although federal guidelines often result in shorter sentences.

"Let it happen in the stock or crypto markets, the theft of confidential business information for your personal gain or that of others is a serious federal crime,” Damian Williams, U.S. Attorney for the Southern District of New York, said in a statement.

A lawyer for Mr. Wahi declined to comment. A Coinbase spokeswoman said the company "takes allegations of misuse of company information very seriously".

Mr. Wahi, 32, started working on Coinbase's asset listing team around October 2020. This gave him access to information about the cryptocurrencies the company would be offering on its platform. p>

Prosecutors say Mr. Wahi provided registration information to his brother, Nikhil Wahi, and his brother's friend, Sameer Ramani, so that they can secretly engage in profitable transactions. The price of a cryptocurrency often increases when a major exchange like Coinbase announces its intention to list it.

In total, Mr. Wahi and the other two men were involved in transactions that used information on 14 ads, generating approximately $1.5 million in illegal profits, according to prosecutors.

Last month, Nikhil Wahi was sentenced to 10 months in prison for his role in the scheme. Mr. Ramani has also been charged.

The insider trading case is part of a growing crackdown on the crypto industry by federal authorities. One of the assistant US attorneys who prosecuted Ishan Wahi, Nicolas Roos, is also spearheading the bureau's expanding case against Sam Bankman-Fried, the disgraced founder of crypto exchange FTX. p>