Ishan Wahi pleads guilty in first-ever cryptocurrency insider-trading case

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Ishan Wahi, a former product manager at Coinbase Global, Inc. (“Coinbase”), pled guilty to two counts of conspiracy to commit wire fraud. The guilty plea is in connection with a scheme to commit insider trading in cryptocurrency assets by using confidential Coinbase information about which crypto assets were scheduled to be listed on that company’s exchanges.

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.

He is scheduled to be sentenced by Judge Preska on May 10, 2023, at noon, according to the press release from the Office of the United States Attorney for the Southern District of New York Damian Williams.

Williams announced that Wahi was arrested and charged in July 2022 and pled guilty Feb. 7, 2023, before U.S. District Judge Loretta A. Preska.

“Wahi is the first insider to admit guilt in an insider trading case involving the cryptocurrency markets,” Williams is quoted saying in the press release.

Beginning in approximately October 2020, Wahi worked at Coinbase as a product manager assigned to a Coinbase asset listing team.  In that role, he was involved in the highly confidential process of listing crypto assets on Coinbase’s exchanges and had detailed and advanced knowledge of which crypto assets Coinbase was planning to list and the timing of public announcements about those crypto asset listings.

The press release says that on multiple occasions between June 2021 and April 2022, Wahi violated his duties of trust and confidence to Coinbase. He did this by providing confidential business information that he learned in connection with his employment at Coinbase to Nikhil Wahi and Sameer Ramani so that they could secretly engage in profitable trades around public announcements by Coinbase that it would be listing certain crypto assets on Coinbase’s exchanges.

Following Coinbase’s public listing announcements, on multiple occasions, Nikhil Wahi and Ramani sold the crypto assets for a profit.

On April 12, 2022, a Twitter account that is well known in the crypto community tweeted regarding an Ethereum blockchain wallet “that bought hundreds of thousands of dollars of tokens exclusively featured in the Coinbase Asset Listing post about 24 hours before it was published.”

The trading activity referenced in the April 12 tweet was trading previously conducted by Ramani based on tips provided by Wahi.  Coinbase thereafter publicly replied on Twitter, noting that it had already begun investigating the matter and, a few weeks later, stated in a public blog post that any Coinbase employee who leaked confidential company information would be “immediately terminated and referred to relevant authorities (potentially for criminal prosecution).”

On May 11, 2022, Coinbase’s director of security operations emailed Wahi to inform him that he should appear for an in-person meeting relating to Coinbase’s asset listing process at Coinbase’s Seattle, Washington, office on May 16, 2022.  Wahi confirmed he would attend the meeting.

On the evening of May 15, 2022, Wahi purchased a one-way flight to India that was scheduled to depart the next day shortly before he was supposed to be interviewed by Coinbase.  In the hours between booking the flight and his scheduled departure, Wahi called and texted Nikhil Wahi and Ramani about Coinbase’s investigation and sent both of them a photograph of the messages he had received on May 11, 2022, from Coinbase’s director of security operations.  Prior to boarding the May 16, 2022, flight to India, Wahi was stopped by law enforcement and prevented from leaving the country.