Former Coinbase global products manager Ishan Wahi, alongside two others have been indicted by US authorities in an ongoing investigation. The trio, including Wahi and his brother, who have both been arrested, are alleged to have had insider trading knowledge of about 14 separate tokens ahead of Coinbase announcing their listing.
Coinbase insider trading details
According to a Thursday announcement, the U.S. Attorney’s Office for the Southern District of New York, and the FBI department in the state are charging Wahi, his brother Nikhil Wahi and another associate Sameer Ramani. The allegation is that all three took advantage of confidential information from Coinbase to make personal gains. And in total, they allegedly made nearly $1.5 million in profits.
Three charged in first ever cryptocurrency insider trading tipping scheme https://t.co/cdTcwQQOau
— US Attorney SDNY (@SDNYnews) July 21, 2022
Authorities believe that between the period of June 2021 and April 2022, Wahi wrongly used his position at Coinbase. He allegedly informed either his brother or Ramani of upcoming token launches on the platform. Expectedly, when a major exchange like Coinbase lists an asset, the price of that asset is expected to surge. So, according to authorities, after getting insider trading information from Wahi, they would invest heavily in those cryptocurrencies before their prices jump.
In detail, the charges filed mentioned the trio making $7,000 in profits off of trading Tribe (TRIBE). They also made around $13,000 in profits from Gala (GALA), Alchemix (ALCX), Powerledger (POWR), and Ethereum Name Service (ENS). However, their biggest gain came from XYO, with which they made roughly $900,000.
Although the Wahi brothers have now been arrested in Seattle today, Ramani is still at large.
SEC weighs in
Interestingly, the U.S. Securities and Exchange Commission (SEC) is also coming up with charges against the trio. The SEC claims that at least 9 of the 25 cryptocurrencies that the trio allegedly did insider trading with, are securities. The regulator also claims they made about $1.1 million in gains in the process and is seeking civil penalties against the trio.
Meanwhile, Coinbase is labelling as mere distractions, the claims that 9 of the cryptocurrencies in question were securities. The company announced via a blog post:
“No assets listed on our platform are securities, and the SEC charges are an unfortunate distraction from today’s appropriate law enforcement action.”
From all indications, Coinbase worked hand-in-hand with authorities after carrying out its internal investigations.