The year of crypto enforcement continues. Not two months after the FBI arrested a former OpenSea employee on charges of insider trading, the U.S. Department of Justice has released a statement explaining its decision to charge Ishan Wahi, Coinbase’s former product manager, with wire fraud conspiracy and wire fraud in connection with an insider trading tipping.
Wahi allegedly used confidential Coinbase information regarding crypto assets that were scheduled to be listed on the platform’s exchanges. The DOJ arrested Ishan and his brother Nikhil Wahi, with whom Ishan is suspected of sharing the information, in Seattle, Washington this morning. They will be presented to the United States District Court for the Western District of Washington later today. Sameer Ramani, Ishan’s friend, was also charged today but remains at large.
The SEC has also alleged that Nikhil Wahi and Sameer Ramani purchased and sold at least 25 crypto assets for a profit, at least nine of which the agency identified as securities.
“Today’s charges are a further reminder that Web3 is not a law-free zone,” said U.S. Attorney Damian Williams in the announcement. “Just last month, I announced the first ever insider trading case involving NFTs, and today I announce the first ever insider trading case involving cryptocurrency markets. Our message with these charges is clear: fraud is fraud is fraud, whether it occurs on the blockchain or on Wall Street. And the Southern District of New York will continue to be relentless in bringing fraudsters to justice, wherever we may find them.”
The message is a harsh and direct one much in line with the department’s actions this year.
The DOJ announcement also indicates that Wahi had attempted to flee to India ahead of a scheduled interview with Coinbase’s security department as a part of the company’s policy meetings regarding its asset-listing process, but was prevented from doing so by authorities.
“Although the allegations in this case relate to transactions made in a crypto exchange – rather than a more traditional financial market – they still constitute insider trading,” said FBI Assistant Director Michael J. Driscoll. “As alleged, the defendants made illegal trades in at least 25 different crypto assets and realized ill-gotten gains totaling approximately $1.5 million. Today’s action should demonstrate the FBI’s commitment to protecting the integrity of all financial markets – both ‘old’ and ‘new.’”
Brian Armstrong, Coinbase’s CEO, took to Twitter to address the charges, saying, “In April, we received information about possible frontrunning of assets shortly before being listed on Coinbase. We immediately launched an investigation into this. As a result of our investigation we identified 3 suspects and provided this information to law enforcement. One person was a Coinbase employee who we terminated. Today, the DOJ has criminally charged this former employee and the two other individuals for this abusive conduct.”
Armstrong also added that today was a “reminder for everyone in crypto, and at Coinbase, that frontrunning is illegal and erodes trust.”
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