Former Coinbase Staff Arrested In First Ever Fraud With Insider Trading

In a sensational announcement, the U.S. SEC on Friday charged three people in the first ever crypto insider trading scheme. A former Coinbase product manager had allegedly perpetrated the scheme before announcing multiple announcements. The manager repeatedly tipped the timing and content of upcoming listing announcements to his brother and a friend, the SEC said. The Coinbase fraud allegations could be a gateway to further investigations from the regulatory bodies.

Alleged Coinbase Fraud Gets Ex Manager Arrested

According to the SEC complaint, Coinbase employee Ishan Wahi helped to coordinate Coinbase announcements with his brother Nikhil Wahi, and friend Sameer Ramani. This led to the arrest of the Coinbase manager. The U.S. Department of Justice said Ishan and Nikhil Wahi were arrested in Seattle on Friday morning.  Ramani was also charged today and remains at large, it added.

The complaint stated that between June 2021 and April 2022, Wahi misappropriated crucial Coinbase confidential information by tipping his closed ones. The three accused used anonymous Ethereum blockchain wallets to acquire crypto assets shortly before the announcements, it said.

“While employed at Coinbase, Ishan Wahi helped to coordinate the platform’s public listing announcements. The announcements included what crypto assets or tokens would be made available for trading. Coinbase treated such information as confidential. It also warned employees not to trade on the basis of, or tip others with, that information.”

Very recently, the SEC asked several exchanges for details on their insider trading protection measures. The commission sought to protect investors after the recent crypto market crash led to high liquidations.

Insider Trading Helped In Buying At Least 25 Crypto Assets

In a shocking revelation, the SEC estimated that the crypto insider trading scheme amounted to illicit profit worth $1.1 million. The complaint mentioned that the perpetrators allegedly purchased at least 25 crypto assets to benefit from the announcements. Soon after the Coinbase announcements, they sold the assets making profits. “The long-running insider trading scheme generated illicit profits totaling more than $1.1 million.”

U.S. Attorney Damian Williams said the charges are a reminder that the crypto space is not a ‘law-free zone’. “Our message with these charges is clear: fraud is fraud is fraud, whether it occurs on the blockchain or on Wall Street.”

Anvesh reports major developments around crypto adoption and price analysis. Having been associated with the industry since 2016, Anvesh is a strong advocate of decentralized technologies. Follow Anvesh on Twitter at @AnveshReddyBTC and reach him out at [email protected]

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