In the first insider trading case involving cryptocurrencies, a former product manager at Coinbase Global and two other individuals have been charged with wire fraud. First Crypto Insider Trading Case
In the first insider trading case involving cryptocurrencies, a former product manager at Bitcoin Global and two other individuals have been charged with wire fraud, according to US authorities in Manhattan on Thursday.
The bitcoin exchange’s product manager Ishan Wahi and his brother Nikhil Wahi were taken into custody on Thursday in Seattle.
They are also accused of comparable US Securities and Exchange Commission civil violations along with a third defendant, their buddy Sameer Ramani. Ramani is untraceable.
Ishan Wahi, 32, is “innocent of all crime and intends to firmly defend himself,” according to a statement from his attorneys. Requests for feedback from Nikhil Wahi’s legal counsel were not immediately fulfilled. A lawyer for Ramani was not immediately available to Reuters.
Ishan Wahi, according to the prosecution, divulged secret information on upcoming announcements of new digital assets that Coinbase will permit users to trade on its platform.
They added that after being called in for a meeting by a Coinbase security director, Ishan Wahi purchased a one-way ticket to India. According to authorities, law enforcement prevented him from boarding the flight on May 16.
Ishan Wahi’s bail was set at $1 million and he was told to turn in his passports at his initial court appearance in Seattle federal court. Despite his apparent attempt to elude capture, the prosecution did not request that he be held. On August 2, he will make his following court appearance in Manhattan.
Nikhil Wahi, 26, and Ramani, 33, are accused of buying and selling at least 25 crypto assets for a profit in the related civil accusations, nine of which the SEC claims it has recognised as securities.
The SEC declined to comment on whether it would take legal action against Coinbase for listing the coins described in the complaint as securities, stating only that its investigation was still ongoing.
Prosecutors claim that Wahi and Ramani bought the assets using ethereum blockchain wallets and traded at least 14 times before Coinbase made its disclosures in June 2021 and April 2022, making at least $1.5 million in illegal gains.
Whether it happens on Wall Street or the blockchain, fraud is fraud, according to U.S. Attorney for Manhattan Damian Williams.
The company disclosed information from the internal investigation into the transaction with authorities, according to Philip Martin, chief security officer at Coinbase.
“We are committed to doing our part to ensure that all market participants have access to the same information,” Martin wrote on Twitter.
In a blog post, Coinbase acknowledged that the SEC had separately filed securities fraud charges against Ishan and Nikhil Wahi, as well as Ramani, but noted that federal prosecutors did not charge securities fraud.
“No assets listed on our platform are securities, and the SEC charges are an unfortunate distraction from today’s appropriate law enforcement action,” the blog post said.
Last month, federal prosecutors in Manhattan charged a former product manager at OpenSea, the largest online marketplace for non-fungible tokens, with insider trading in what the prosecutors described as the first such case involving digital assets.