Former Coinbase Employee Charged After Netting $1.5 Million From Trading Ahead Of Crypto Listing Announcements

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by Tyler Durden
Thursday, Jul 21, 2022 - 06:25 PM

In one of the first cases of its kind, a former employee of Coinbase Global and two other people have been charged by U.S. prosecutors in Manhattan with wire fraud for insider trading of cryptocurrency.

Former product manager at the cryptocurrency exchange Ishan Wahi was arrested Thursday, along with his brother Nikhil Wahi. They are expected to make their first appearance in federal court later in the day on Thursday, according to Reuters

A friend of theirs, Sameer Ramani also faces civil charges by the Securities and Exchange Commission. 

The case revolves around leaking what cryptos would soon be listed on Coinbase. Wahi "shared confidential information about forthcoming announcements of new cryptocurrency assets that Coinbase would allow users to trade," Reuters reported. 

Then, the defendants used ethereum blockchain wallets to acquire the assets and trade them "at least 14 times" prior to Coinbase's announcement of the listings. Prosecutors allege this resulted in $1.5 million of illicit gains. 

Damian Williams, the U.S. Attorney in Manhattan, said: "Fraud is fraud is fraud, whether it occurs on the blockchain or on Wall Street."

After Wahi had been summoned to a Coinbase meeting, he purchased a one way ticket to India, the report says. Law enforcement stopped him from boarding the flight, which was scheduled for May 16 of this year. 

Wahi's lawyers did not comment. Philip Martin, Coinbase's chief security officer, shared the company's findings with prosecutors, which led to the action. Coinbase received information in April about the possible wrongdoing, Bloomberg reported Thursday. 

"We are committed to doing our part to ensure that all market participants have access to the same information," Martin said on his Twitter account. "At Coinbase, we actively monitor for illegal activity and investigate any alleged misconduct. In April, we received information about possible frontrunning of assets shortly before being listed on Coinbase. We immediately launched an investigation into this."