Home News Former Coinbase Employee Pleads Guilty to Insider Trading Scandal.

James Carter

08 Feb 2023

Former Coinbase Employee Pleads Guilty to Insider Trading Scandal.

A former employee of the significant cryptocurrency exchange Coinbase has pled guilty to insider trading, making this the first case involving cryptocurrency-related illegal activity in the United States.

The DOJ said in a press release on Tuesday that former Coinbase product manager Ishan Wahi pleaded guilty to 2 counts of conspiracy to commit wire fraud in connection with a plan to do insider trading in cryptocurrency assets by using confidential information about cryptocurrencies that were going to be listed on the platform.

The Southern District of New York federal court received Wahi’s allegations in July 2018. Damian W, US Attorney for the Southern District of New York, claims Wahi is the first insider to admit guilt in a bitcoin insider trading prosecution. Williams explained that Wahi was the case’s only insider. Williams said Wahi was the “first insider to acknowledge guilt in an insider trading case involving the cryptocurrency markets.”

Theft of private company information for personal gain or the benefit of others is a serious federal offense, regardless of whether the theft occurs in the equity or cryptocurrency markets.

On May 10th, the judge who presided over Wahi’s case is scheduled to deliver their decision. According to Reuters, as part of his plea deal, he is looking at a prison term ranging from 36 to 47 months, even though each offence carries a maximum punishment of 20 years. Nevertheless, the potential sentence he faces is in the range of 36 to 47 months in prison.

According to the notification made by the DOJ, Wahi began working on the asset listings team at Coinbase around the beginning of October 2020. Because of this, he was granted access to information regarding the digital assets that are anticipated to be listed on the site.

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According to the Department of Justice, Wahi disclosed this information so that his brother Nikhil Wahi and his friend Sammer Ramani could purchase tokens immediately before listing them on the platform. According to the statement that the DOJ released in 2017, the three of them were able to create “gains, both realized and unrealized, totaling at least nearly $1.5 million” as a direct result of their actions.

Ramani has not been taken into custody at this time. In September, Nikhil Wahi entered a guilty plea to a charge of conspiring to commit wire fraud, and he was sentenced to ten months in jail just a few weeks ago.

Because it causes a surge in the price of the token, becoming listed on a major exchange is typically considered essential in the cryptocurrency industry. Naturally, this also generates a significant incentive for the people working for cryptocurrency exchanges.

After an incident involving insider trading, Coinbase CEO Brian Armstrong addressed concerns regarding the listings of tokens on the controlled exchange. He outlined new steps to enhance the procedures for listing tokens and ensure that there is no unfair advantage that can be taken advantage of.

To be more specific, he stated that they would attempt to eliminate the capability of analyzing on-chain data to estimate which tokens are on track to be distributed in the near future. Armstrong stated that even while this data is accessible to the general public, only the most dedicated and experienced people would be tapping into it.