Tippee Nikhil Wahi pleads guilty in first-ever cryptocurrency insider trading case

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Nikhil Wahi, the brother of a former product manager at Coinbase Global, Inc. (“Coinbase”), pled guilty to one count of conspiracy to commit wire fraud 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 Coinbase’s exchanges.

Wahi was arrested in July of this year and pled guilty before U.S. District Judge Loretta A. Preska, a Sept 12, 2022, press release from Damian Williams, the United States Attorney for the Southern District of New York.

Nikhil Wahi, 26, of Seattle, Washington, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison, but the term will be determined by a judge. Nikhil Wahi scheduled to be sentenced by Judge Preska on December 13, 2022, at 12:00 p.m., the press release said.

U.S. Attorney Williams said this was the first time ever, a defendant has admitted his guilt in an insider trading case involving the cryptocurrency markets.

According to the allegations in the Indictment, and statements made in public court proceedings, on which the press release is based, the U.S. Attorney’s Office described the case as follows:

At all relevant times, Coinbase was one of the largest cryptocurrency exchanges in the world.  Coinbase users could acquire, exchange, and sell various crypto assets through online user accounts with Coinbase.  Periodically, Coinbase added new crypto assets to those that could be traded through its exchange, and the market value of crypto assets typically significantly increased after Coinbase announced that it would be listing a particular crypto asset.  Accordingly, Coinbase kept such information strictly confidential and prohibited its employees from sharing that information with others, including by providing a “tip” to any person who might trade based on that information.

Beginning in approximately October 2020, Ishan Wahi worked at Coinbase as a product manager assigned to a Coinbase asset listing team.  In that role, Ishan Wahi 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.

On multiple occasions between July 2021 and May 2022, after getting tips from Ishan Wahi as to which crypto assets Coinbase was planning to list on its exchanges, Nikhil Wahi used anonymous Ethereum blockchain wallets to acquire those crypto assets shortly before Coinbase publicly announced that it was listing these crypto assets on its exchanges.  Following Coinbase’s public listing announcements, on multiple occasions Nikhil Wahi sold the crypto assets for a profit.

To conceal his purchases of crypto assets in advance of Coinbase listing announcements, Nikhil Wahi used accounts at centralized exchanges held in the names of others, and transferred funds, crypto assets, and proceeds of their scheme through multiple anonymous Ethereum blockchain wallets. Nikhil Wahi also regularly created and used new Ethereum blockchain wallets without any prior transaction history in order to further conceal his involvement in the scheme, the press release said.