Coinbase employee charged with insider trading

Coinbase employee charged with insider trading

Ishan Wahi, a former product manager at Coinbase, has been charged with allegedly leading the charge of front-running token listings.

The Justice Department's crackdown on cryptocurrency has heightened, resulting in a significant increase in the level of competition among the cryptocurrencies that the U.S. has faced. On Thursday, federal prosecutors charged an employee of Coinbase, the leading crypto exchange, and two others in the first-ever case of insider trading involving cryptocurrencies.

In a 22-page indictment, prosecutors in New York allege that former coinbase product manager Ishan Wahi, his brother Nikhil Wahi, and his friend Sameer Ramani used his connections to learn which crypto assets were scheduled to be listed on Coinbase's exchanges. The group then bought the tokens and sold them after the information became public and usually boosted the value of the tokens.

The three men traded over 25 different crypto assets on at least 14 occasions and walked away with $1.5 million in illegal profits, according to the indictment. To make money from trading securities, it's illegal.

The SEC filed suit against the three defendants, alleging that Ishan tipped off Nikhil Wahi and Ramani about the imminent listing of tokens, including lightly traded names POWR, LCX and AMP.

The trio are being charged with wire fraud conspiracy and wire fraud. The case comes less than two months after former OpenSea employee Nate Chastain was arrested for alleged insider trading.

U.S. Attorney Damian Williams said his charges are a further reminder that Web3 is not a law-free zone. While there has been a decade-long debate surrounding whether cryptocurrencies are securities, the Justice Department has made it clear that digital assets are covered by the same laws that encompass stocks, bonds, and other instruments.

The SEC said the definition of securities was based on 'digital assets', 'tokens', and 'coins'.

Crypto's reputation has regained after numerous rug pulls and alleged Ponzi schemes. Some believe it will continue to get worse.

In the indictment, the Southern District of New York confirmed this case was brought to their attention by a supposed to be crypto influencer Cobie. Ishan Wahi, who fled the United States on May 16, tried to flee the country to India, but was blocked from leaving the country by law enforcement. He was also arrested, but Ramani, 30, is still in police custody. In addition, all three faces a maximum sentence of 20 years in prison if convicted.

The latest move by US law enforcement sends a clear message to the crypto community to play by the rules, even as the debate over tokens continues to rage.