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Coinbase Insider Trading Charges

Former Coinbase officials have been indicted in the US for wire fraud and insider trading. (Photo: 123RF)

WASHINGTON — Former officials of Coinbase, one of the world’s largest cryptocurrency exchanges, were indicted Thursday in the United States for wire fraud and insider trading, a first for virtual currencies.

The U.S. Market Regulator (SEC) and Manhattan Federal Attorney’s Office on Thursday announced the indictment of a Coinbase product executive, his brother and a friend.

The three suspects are charged with ‘wire fraud conspiracy in connection with a scheme to commit insider trading […] using confidential information about cryptoassets that were to be listed on Coinbase exchanges,” according to a statement.

Ishan Wahi, 32, and his brother Nikhil Wahi were arrested Thursday morning in Seattle, while the third suspect, Sameer Ramani, “is still at large.”

“These charges are yet another reminder that Web3 is not a lawless zone,” said New York Southern District Attorney Damian Williams.

Web3 corresponds to the evolution of the internet towards a decentralized universe, based on “blockchain” technology, shared registers supposed to ensure the security and transparency of transactions.

“Last month, I announced the first ever case of insider trading involving NFTs, and today I am announcing the first ever case of insider trading involving cryptocurrency markets,” he said. he indicates.

FBI Deputy Director Michael Driscoll clarified that the defendants “carried out illegal transactions in at least 25 different crypto assets and made ill-gotten gains totaling approximately $1.5 million.”

From October 2020, Ishan Wahi worked at Coinbase as a product manager in charge of an asset list.

He was involved in the highly confidential process of listing cryptoassets on Coinbase exchanges and “had detailed and advanced knowledge” of the timing of such listings.

He was a member of a private company messaging channel, which was not shared by all Coinbase employees, but restricted to a small number of employees directly involved in the process of listing these assets on the platform.

On at least 14 occasions between June 2021 and April 2022, this manager was informed in advance of the schedule for listing these assets.

He “diverted this confidential information by notifying either his brother or his friend […] so that they can transact in these crypto assets before public announcements from Coinbase,” according to the prosecutor.

After their public listing, his brother Nikhil Wahi and Sameer Ramani sold these assets at a profit, generating $1.5 million in virtual gains. They then transferred these assets to multiple anonymous wallets denominated in ethereum, the second most common virtual currency after bitcoin.

The scheme was uncovered in April, and authorities alerted, when a post on Twitter reported that an ethereum wallet had purchased thousands of dollars worth of tokens 24 hours before they were — normally exclusively — listed on Coinbase.

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