Ishan Wahi, a former product manager at Coinbase Global Inc., his brother, Nikhil Wahi, and Ishan’s friend Sameer Ramani, have been charged with the first ever crypto insider trading tipping scheme.
Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”) disclosed the information on Thursday.
They alleged that the three were involved in “a wired fraud and 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.”
“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. Our message with these charges is clear: fraud is fraud, whether it occurs on the blockchain or on Wall Street. And the Southern District of New York will continue to be relentless in bringing fraudsters to justice, wherever we may find them,” said US Attorney Darmian Williams.
The FBI Assistant Director Michael J. Driscoll also expressed the FBI’s commitment to the protection of the integrity of all financial markets, regardless of the era.
According to Driscoll, “Although the allegations in this case relate to transactions made in a crypto exchange – rather than a more traditional financial market – they still constitute insider trading. As alleged, the defendants made illegal trades in at least 25 different crypto assets and realized ill-gotten gains totaling approximately $1.5 million. Today’s action should demonstrate the FBI’s commitment to protecting the integrity of all financial markets – both ‘old’ and ‘new.’”
In the release by the Department of Justice, Ishan Wahi in around October 2020 worked at Coinbase Global Inc. as a product manager which he was assigned to the crypto exchange’s listing team, making confidential information about the coins to be listed accessible to him.
However, on a minimum of 14 occasions between June 2021 to April 2022, Wahi with this information tipped either his brother Nikhil Wahi or his friend, Sameer Ramani, for them to place profitable trades on these coins before the listing by the Coinbase.
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Coinbase through its Twitter account said that it identified these individuals and tipped the Department of Justice about them, the exchange says that it “proactively monitors illegal activity and investigates alleged misconduct.”
Also, in a blog post, Brian Armstrong said that the SEC’s move to charge these three with securities fraud is an unfortunate distraction, he furthered that Coinbase has filed complaints about them to the Justice Department.
“Coinbase takes allegations of improper use of company information very seriously, as demonstrated by our rapid investigation of this matter. Again, we have zero tolerance for this kind of misconduct and will not hesitate to take action against any employee when we find wrongdoing,” said Brian Armstrong.
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