Former Coinbase employee, brother plead not guilty to insider trading

A former Coinbase Global Inc product manager and his brother pleaded not guilty on Wednesday to wire fraud charges in the US prosecutors called the first insider trading case involving cryptocurrencies.

Ishan Wahi, 32, a former product manager, was arrested last month in Seattle on charges he shared confidential information with his brother Nikhil and his friend Sameer Ramani about forthcoming announcements of new digital assets that Coinbase would allow users to trade.

Nikhil Wahi pleaded not guilty at the arraignment on Wednesday in Manhattan federal court before US District Judge Loretta Preska. Ramani, who was also charged, is at large.

Prosecutors said Nikhil Wahi and Ramani used ethereum wallets to acquire assets and trade at least 14 times before Coinbase announcements in June 2021 and April 2022.

The assets' announcements typically caused them to rise in value and generate at least 1.5 million in illicit gains, prosecutors said.

One of the world's largest criptocurrency exchanges is Coinbase.

David Miller, a lawyer for Ishan Wahi, said the charges should be dismissed because insider trading needs to involve securities or commodities and this case did not.

Miller said Coinbase tested new tokens before it publicly listed them, meaning that the information his client was accused of sharing was not confidential.

Noah Solowiejczyk, a prosecutor, countered that the information was not public and the prosecution was consistent with previous wire fraud cases.

The US regulators are weighing how to oversee criptocurrency trading.

Coinbase didn't respond immediately to a request for comment. Last month, the company said it had shared with prosecutors its findings from an internal investigation into the trading.

Bail for the Wahi brothers was set at $1 million each. Their next court appearance is scheduled for March 22. The US Securities and Exchange Commission has filed civil charges against them.