In what federal officials claimed as the U.S. government’s first bitcoin insider trading case, a former Coinbase product manager, his brother, and a Houston man were all accused on Thursday.
Federal authorities announced the unsealing of an indictment in a federal court in Manhattan as they detained the brothers Ishan and Nikhil Wahi and released Sameer Ramani, a man from Houston, on the run.
According to the authorities, Nikhil Wahi, 26, and his friend Ramani, 33, received advice from Ishan Wahi, 32, a product manager at Coinbase Global Inc., one of the biggest bitcoin exchanges in the world with headquarters in Seattle. Wire fraud and wire fraud conspiracy were alleged against all three.
Ishan Wahi was allegedly detained by law enforcement before boarding an aircraft on May 16 bound for India and prohibited from leaving the country, according to the indictment. He had called and texted his brother and Ramani in the hours prior to the flight to inform them of an investigation Coinbase was conducting, according to a release.
After consenting to be questioned by Coinbase for an internal investigation, Ishan Wahi purchased a one-way plane ticket to India in a “unsuccessful attempt to depart the United States,” according to the indictment.
According to U.S. Attorney Damian Williams, this is the government’s first instance of insider trading involving cryptocurrency marketplaces. It serves as a reminder that the cryptocurrency markets are subject to laws, according to him.
The defendants traded at least 25 different crypto assets to earn nearly $1.5 million in ill-gotten gains, according to Michael Driscoll, chief of the FBI’s New York office.
Ishan Wahi’s attorneys claimed in an email to The Associated Press that their client “intends to defend himself forcefully against these claims and in the SEC case” and that he is innocent.
Other defence attorneys were contacted for comments via messages. The men were charged in federal court in Seattle with civil insider trading by the Securities and Exchange Commission.
The allegations against the group, according to the SEC, were brought after they engaged in a plan to trade ahead of many announcements regarding certain crypto assets that were going the ability to trade them on the Coinbase platform.
Carolyn M. Welshhans, Acting Chief of the Enforcement Division’s Crypto Assets and Cyber Unit, said, “As today’s prosecution indicates, whether in equities, options, crypto assets, or other securities, we will uncover and combat insider trading in securities wherever we see it.”
Ishan Wahi reportedly started working as a product manager for the asset listing team in October 2020, according to the New York indictment. From June 2021 to this past April, he allegedly gave his brother and a buddy advice concerning sensitive material.
The company’s CEO, Brian Armstrong, stated on Twitter and in a blog post on Thursday that an internal investigation into “potential frontrunning of assets soon before being listed on Coinbase” had started in April.
According to the indictment, the frontrunning was made known to the public through a tweet made in April on a Twitter account with “hundreds of thousands of followers in the crypto world.”
According to Armstrong, the business gathered enough proof before firing Ishan Wahi and sending its information on the three men to the Justice Department. “We will investigate bad actors and report them to law enforcement. They will face serious legal penalties, including serving time in prison,” he continued.
