NEW YORK (1010 WINS) — Three men were charged in a Manhattan federal court for insider trading with cryptocurrency on Thursday.
It’s the first time someone has been charged for insider trading with cryptocurrency as opposed to more traditional assets like stocks or bonds.
“Today’s charges are a further reminder that Web3 is not a law-free zone. Just last month, I announced the first ever insider trading case involving NFTs, and today I announce the first ever insider trading case involving cryptocurrency markets,” said U.S. Attorney Damian Williams. “Our message with these charges is clear: fraud is fraud is fraud, whether it occurs on the blockchain or on Wall Street.”
Ishan Wahi, 32, his brother Nikhil Wahi, 26, and his friend Sameer Ramani, 33, were involved in a scheme to use insider information from Ishan Wahi’s job to profit from crypto trades.
The elder Wahi worked at Coinbase, one of the largest and most prominent cryptocurrency exchanges in the world.
When Coinbase would announce it would list a new type of cryptocurrency, the price would often spike due to more traders having access to the asset through a high profile platform.
Coinbase therefore kept information on which cryptocurrencies it planned to carry highly confidential and prohibited employees from trading those coins or giving tips to others.
Wahi was part of the Coinbase asset listing team which gave him knowledge of which coins would be listed before the information was made public.
On at least 14 occasions between June 2021 and April 2022, he provided tips to his brother and Ramani, officials believe.
The three conspirators would anonymously buy assets right before Coinbase announced its intention to list them, prosecutors claim. They would then sell for a profit after the announcement was made.
The trio allegedly made about $1.5 million this way, according to authorities .
They allegedly took steps to hide their illicit purchases by moving the assets through multiple anonymous digital wallets.
In April, Coinbase announced it was planning on listing dozens of new assets which the defendants had allegedly bought in advance of the announcement, according to prosecutors.
A popular Twitter account saw the activity and posted about the anonymous 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.”
Coinbase caught wind of the post and announced an investigation into the activity.
On May 11, Coinbase’s director of security operations invited Ishan Wahi to a meeting regarding the asset listing process.
Four days later, Wahi allegedly purchased a one-way flight to India. He was stopped by law enforcement before he could board the plane.
Ishan and Nikhil Wahi were arrested in Seattle Thursday morning for wire fraud, but Ramani remains at large.
Each of the defendants face up to 20 years in prison if convicted for wire fraud.
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