A former employee of major cryptocurrency exchange Coinbase has pleaded guilty to insider trading, marking the first crypto-related insider trading case in the US.
Ishan Wahi, a former Coinbase product manager, has pled guilty to two counts of conspiracy to commit wire fraud in connection with a scheme to commit insider trading in cryptocurrency assets by using confidential information about cryptocurrencies scheduled to be listed on the platform, the DOJ said in a press release Tuesday.
As reported, the charges against Wahi were first filed in July last year in federal court in the Southern District of New York. “Wahi is the first insider to admit guilt in an insider trading case involving the cryptocurrency markets,” Damian Williams, the U.S. attorney for the Southern District of New York, said, adding:
“Whether it occurs in the equity markets or the crypto markets, stealing confidential business information for your own personal profit or the profit of others is a serious federal crime.”
Wahi is scheduled to be sentenced on May 10. Each count carries a maximum sentence of 20 years in prison, though he faces a prison sentence of between 36 and 47 months as part of his plea deal, according to Reuters.
Wahi started working on Coinbase`s asset listings team around October 2020, per the announcement by the DOJ. This gave him access to information about which digital assets are planned to be listed on the platform.
Wahi then leaked this information to help his brother Nikhil Wahi and friend Sammer Ramani buy tokens just before they were listed on the platform, collectively generating “realized and unrealized gains totaling at least approximately $1.5 million,” the DOJ said last year.
Ramani has not been apprehended. Nikhil Wahi pleaded guilty to a wire fraud conspiracy charge in September and was last month sentenced to 10 months in prison. Listing on major exchanges in the crypto space is very important as it usually drives the price of a token skyrocketing. Of course, this also provides great incentives for cryptocurrency exchange employees.
After the insider trading incident, Coinbase CEO Brian Armstrong addressed the issue of listing tokens on centralized exchanges. He announced measures to improve the token listing process and ensure there are no undue gains.
Specifically, he said, he would try to remove the ability to analyze data from the network to guess which tokens should be launched on schedule. During the release of the data, Armstrong said it would only be used by the most passionate and advanced users.