What You Need to Know
- Ishan Wahi allegedly tipped off both his brother and a friend when tokens were about to be listed on the crypto exchange.
- Nikhil Wahi and Sameer Ramini used that information to trade dozens of tokens from at least June 2021 until April 2022 for a profit of more than $1 million, according to authorities.
- American officials have been stepping up their oversight of an industry they say often operates in legal gray areas.
U.S. authorities arrested and charged a former Coinbase Global Inc. product manager with allegedly leaking insider information to help his brother and a friend buy tokens just before they were listed on the crypto exchange.
The move on Thursday to detain Ishan Wahi, who helped oversee listings for a Coinbase unit focused on investment products, follows a sweeping probe that involved prosecutors in the Southern District of New York and the Securities and Exchange Commission. The SEC also sued Wahi for allegedly violating the agency’s anti-fraud rules.
The exchange operator wasn’t a focus of the probe and won’t face charges. In a press release, Uy.S. Attorney Damian Williams said Coinbase cooperated in the investigation.
“Today’s charges are a further reminder that Web3 is not a law-free zone,” he said. “Our message with these charges is clear: fraud is fraud is fraud, whether it occurs on the blockchain or on Wall Street.”
Damian Williams, U.S. attorney for the Southern District of New York, speaks during a news conference in New York, U.S., on Wednesday, April 27, 2022. U.S. prosecutors charged Archegos Capital Management founder Bill Hwang and Chief Financial Officer Patrick Halligan with fraud, in the latest fallout from the spectacular collapse of the family office.
Coinbase lets Americans trade more than 150 tokens, including many that have been added in recent months. Because of the platform’s status as the U.S.’s largest crypto exchange, coins can often see a rush of interest — and a surge in price — immediately after being included.
Wahi tipped off his brother, Nikhil Wahi, and friend Sameer Ramini when tokens were about to be listed by the exchange, according to charges filed on Thursday. Nikhil Wahi and Ramini allegedly used that information to trade dozens of tokens from at least June 2021 until April 2022 for a profit of more than $1 million, the government said.
Coinbase didn’t immediately respond to a request for comment. A spokesman for Manhattan prosecutors confirmed the arrests. The SEC declined tao comment.
Andrew St. Laurent, an attorney for Ishan Wahi, declined to comment. An attorney for Nikhil Wahi didn’t immediately respond to a request for comment. Ramini couldn’t immediately be reached.
According to the indictment, after Coinbase set up an interview for May 16 with Wahi in Seattle as part of its internal investigation, he bought a one-way ticket for a flight to New Delhi scheduled to leave in 11 hours.
About 35 minutes before the interview was scheduled to begin, Wahi emailed Coinbase’s director of security operations to say that he “had to fly back home” but that the meeting could be rescheduled, according to the indictment. In that period, Wahi called and texted his brother and Ramani, sending them images of the messages he had received from Coinbase’s internal security director.
Law enforcement agents showed up at the airport before Wahi could board his flight on May 16.
Despite his apparent willingness to reschedule the meeting for later in the week or the following week, he brought to the airport an “extensive array of belongings, including, among other items, three large suitcases, seven electronic devices, two passports, multiple other forms of identification, hundreds of dollars in U.S. currency” and other personal effects, according to the filing.