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A former manager at Coinbase recently pleaded not guilty to charges of insider trading and wire fraud.
Former Coinbase product manager Ishan Wahi has pleaded not guilty to insider trading. At a hearing on Wednesday, the 32-year-old fielded charges of wire fraud. According to a Reuters report, US prosecutors allege that the fraud occurred while Wahi was still working at the American crypto exchange. Prosecutors also allege that the Coinbase ex-manager’s fraud charge entails the first insider trading case involving crypto.
As a result, the US Justice Department of Justice (DOJ) charged Wahi with wire fraud in an indictment filed on July 21st in New York. In addition, the DOJ stated in its filing that the former Coinbase manager conspired to commit wire fraud in connection with an insider trading scheme. Furthermore, the DOJ stated in its press release that Ishan and his brother Nikhil have been arrested by the FBI. However, Sameer Ramani, another person connected with the alleged crime, remained at large as of July 21st. The DOJ filing states:
“As part of an insider trading scheme, Ishan Wahi violated his duties of trust and confidence to Coinbase.”
SEC Filed Separate Insider Trading Charge against Former Coinbase Manager
In a separate filing issued the same day, the Securities and Exchange Commission (SEC) provided details of Wahi’s alleged insider trading. According to the filing, the ex-manager shared listing announcements in advance to his brother Nikhil and friend Sameer Ramani. Shared details include 14 different Coinbase listing announcements for over 25 digital currencies. The filing then states that Wahi’s cohorts allegedly used that insider knowledge to trade before announcements went live. In the process, the complicit duo made over $1.1 million in profits. Commenting on the development, Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, explained:
“We are not concerned with labels, but rather the economic realities of an offering. In this case, those realities affirm that a number of the crypto assets at issue were securities, and, as alleged, the defendants engaged in typical insider trading ahead of their listing on Coinbase.”
In addition, Grewal also gave reassurances to investors, stating that his division always looks to protect their interests. As the SEC Division of Enforcement Director put it:
“Rest assured, we’ll continue to ensure a level playing field for investors, regardless of the label placed on the securities involved.”
Other Information from SEC Indictment
The SEC alleges that Wahi, an Indian national on a US work visa, used an international phone number to commit the act. In addition, the Coinbase ex-manager purchased a one-way airline to a foreign country in an attempt to flee the US. Furthermore, the regulatory agency also stated that the Wahi brothers and Ramani elaborately tried to evade law enforcement detection. They did this by moving their digital currencies across different Ethereum wallets owned by themselves and others.
When the charges were initially filed, US Attorney Damian Williams sought to issue a warning on crypto crimes. According to Williams, the charges should serve as a confirmation that “Web3 is not a law-free zone.”