This is a first in the field of virtual currencies. Former officials of Coinbase, one of the largest cryptocurrency exchanges in the world, were indicted on Thursday in the United States for wire fraud and insider trading.
The US Markets Regulator (SEC) and the Manhattan Federal Attorney’s Office announced on Thursday the indictment of a Coinbase product manager, his brother and a friend. Ishan Wahi, 32, and his brother Nikhil Wahi were arrested Thursday morning in Seattle, Washington, while the third suspect, Sameer Ramani, “is still at large”.
The three suspects are accused of “conspiracy to wire fraud as part of a scheme to commit insider trading (…) using confidential information about crypto-assets that were to be listed on Coinbase Exchanges” , according to a press release.
FBI Deputy Director Michael Driscoll clarified that the defendants “conducted illegal transactions in at least 25 different crypto assets and made ill-gotten gains totaling approximately $1.5 million.”
“Misappropriation of confidential information”
Ishan Wahi started working at Coinbase as a product manager in charge of an asset listing from October 2020. He was involved in the highly confidential process of listing cryptoassets on Coinbase exchanges and “had detailed and advanced knowledge” of the timing of these listings.
He was a member of a private company messaging channel, which was not shared by all Coinbase employees but reserved for 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 could carry out transactions on these cryptographic assets before the public announcements of 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 came to light in April 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. The authorities were then alerted.
“These charges are yet another reminder that Web3 is not a no-go 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.