Ex-Coinbase Employee Admits Guilt in Historic Cryptocurrency Insider Trading Incident
Ishan Wahi Shared Insider Information with Associates about Upcoming Crypto Listings on Coinbase
The US Attorney for the Southern District of New York, Damian Williams, announced in a press release yesterday (the “Press Release”) that Ishan Wahi, a former Coinbase product manager, has admitted guilt to two counts of conspiracy to commit wire fraud. The charges stem from Wahi's use of confidential Coinbase information to engage in insider trading of cryptocurrency assets. Wahi was arrested in July 2022 and entered his guilty plea today before Judge Loretta A. Preska." Shortly after the press release, Paul Grewal, Coinbase’sChief Legal Officer, stated on a LinkedIn post yesterday: “Coinbase takes allegations of improper use of company information with the utmost seriousness. We have a zero tolerance for this kind of misconduct. We appreciate the DOJ's efforts in holding this individual accountable.”
To summarize:
Ishan Wahi broke trust with Coinbase, sharing confidential info with Nikhil Wahi and Sameer Ramani from June 2021 to April 2022. This allowed them to trade and profit from Coinbase's public asset listings. They sold the crypto assets after Coinbase's announcements. Profit was made in connection with such transactions by both Nikhil Wahi and Sameer Ramani.
This weas initially discovered when Twitter user Cobie exposed a Cryptocurrency (specifically Ethereum) wallet that invested over $400,000 in tokens listed in Coinbase's recent announcement of a new token, just hours after the publication of the blog post regarding the listing of a new token and tweeted on April 12, 2022: “Found an ETH address that bought hundreds of thousands of dollars of tokens exclusively featured in the Coinbase Asset Listing post about 24 hours before it was published, rofl.”
On April 28, 2022, Brian Armstrong published a blog post regarding “An update on our asset listing processes”, stating:
Like all publicly traded companies, Coinbase has a trading policy in place that restricts when employees and other insiders can buy or sell company stock. But our trading policy goes well beyond this, and also prohibits employees and contractors from trading crypto assets on material non-public information, such as when a new asset will be added to our platform. We mandate that all employees trade crypto only on Coinbase’s trading platforms (where the asset is supported) so we can look out for prohibited trading activities. And we have a dedicated Trade Surveillance team that utilizes advanced software to investigate and stay ahead of possible abuse.
On May 11, 2022, WAHI received an email from Coinbase's security operations head. He was to appear for a meeting in Seattle on May 16 to discuss Coinbase's asset listing process. WAHI agreed to attend.
As claimed in the indictment and publicly stated in court proceedings:
On the night of May 15th, 2022, Wahi decided to purchase a one-way to India, set to leave the next day just before he was to meet with Coinbase. In the time between booking the trip and the flight's departure, he called and texted Nikhil Wahi and Ramani about Coinbase's inquiry/investigation/meeting. Wahi sent a photo of the messages he received from Coinbase's director of security operations on May 11th. Before boarding his flight, law enforcement stopped Waghi, prevented him from leaving the country.
As stated in the Department of Justice’s, U.S. Attorney’s Office,
Southern District of New York, Press Release yesterday:
ISHAN WAHI, 32, of Seattle, Washington, pled guilty to two counts of conspiracy to commit wire fraud, which each carry, respectively, a maximum sentence of 20 years in prison.
The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge. WAHI is scheduled to be sentenced by Judge Preska on May 10, 2023, at 12:00 p.m.
Mr. Williams praised the investigative work of the Federal Bureau of Investigation. He also acknowledged the assistance of the Justice Department’s National Cryptocurrency Enforcement Team, as well as that of the Securities and Exchange Commission, which separately initiated civil proceedings against WAHI.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Noah Solowiejczyk and Nicolas Roos are in charge of the prosecution.
I would like to applaud Coinbase for its response to this criminal activity and violation of trust. Furthermore, thank you to the law enforcement, FBI, and Department of Justice for working to swiftly bring justice and deter such abhorrent activity by Mr. Wahi. His actions represent everything that the crypto industry is against. If you have not read it yet, I encourage you to read Brian Armstrong’s Blog Post: “Increasing transparency for new asset listings on Coinbase.”