Nikhil Wahi – brother to former Coinbase Product Manager Ishan Wahi – has pleaded guilty to wire fraud conspiracy using confidential information.
Guilty As Charged
As reported by Reuters, the ex-manager’s brother confessed during a virtual court hearing in front of a Manhattan judge. He admitted to making cryptocurrency trades based on confidential information from his brother, who used to work at Coinbase.
“I knew that it was wrong to receive Coinbase’s confidential information and make trades based on that confidential information,” Nikhil Wahi told the judge.
In July, the Department of Justice (DOJ) charged both brothers and one friend – Sameer Ramani – with wire fraud conspiracy and wire fraud. The department alleged that Ishan Wahi was sharing confidential information with the other two men about what coins were next to be listed at Coinbase.
Coinbase is the largest cryptocurrency exchange in the United States. Naturally, when new listings are publicly announced by the company, the value of the relevant tokens tends to rise.
Using Ishan Wahi’s counsel, the other men allegedly purchased multiple cryptos before their public announcements and dumped them shortly afterward. Repeated across 25 different tokens, the group managed to accrue over $1.5 million in profit, say the prosecutors.
Nikhil Wahi said that he understands his guilty plea will result in his deportation from the United States, and the loss of “everything that I have worked for.” He will be sentenced in December.
By contrast, Ishan Wahi has pleaded not guilty and is scheduled to appear in court on March 22nd. The ex-manager attempted to flee the United States after being called for a private meeting with Coinbase’s director of security in May. His escape was prevented by law enforcement at the airport, but his friend Ramani remains at large.
Insider Trading in Crypto
Upon announcing the charges in July, the DOJ said their charges made for the first insider trading case involving cryptocurrencies.
However, just a month prior, a former employee at OpenSea was charged with insider trading of NFTs. Like the Coinbase manager, he used private intel to purchase collections before being listed in the marketplace and sold them afterward at a profit.
The accused, Nathaniel Chastain, is defending himself. His lawyers argue that he conducted no such insider trading, as NFTs technically don’t qualify as securities or commodities.