Nikhil Wahi 26, the brother of an ex product manager at Coinbase, a cryptocurrency trading platform, pleaded guilty to committing wire fraud following a tip with confidential information about the company’s crypto offerings.
Appearing before a New York Judge at a virtual hearing, Wahi admitted having committed wire fraud by using multiple anonymous Ethereum blockchain wallets to purchase large quantities of at least six of the crypto assets that were to be included in Coinbase’s April 11, 2022, listing announcement after his brother Ishan Wahi, a former product manager at Coinbase Global tipped him and another associate Sameer Ramani regarding crypto assets that were going to be listed on the Coinbase exchanges
Coinbase ex manager lied about his trip to India to escape a meeting
Prosecutors say the scheme generated $1.5 million in profits and when Coinbase learned of the misappropriation of its trade secrets summoned Ishan Wahi to appear for an in person disciplinary meeting which Wahi agreed to attend, and later purchased a one-way flight to India that was scheduled to depart the next day and falsely told Coinbase employees that he had already departed for India when he had not.
Michael J. Driscoll, the FBI assistant Director and U.S. Attorney Damian Williams said in an indictment released by the Department of Justice that the three made illegal trades in at least 25 different crypto assets using the Ethereum blockchain wallets to acquire assets and realized ill-gotten gains totaling approximately $1.5 million.
“Fraud is fraud, whether it occurs on the blockchain or on Wall Street,” Damian Williams, the U.S. Attorney in Manhattan, said in a statement.
Coinbase tightens internal trading policies
Following the incident, Coinbase moved to tighten the noose to ensure that new token listings being considered are not known beforehand. Brian Armstrong, Coinbase CEO, said in a Bloomberg blog that the Coinbase is committed to cracking on insiders who share confidential information in an attempt to determine or manipulate their customers.
“While this is public data, it isn’t data that all customers can easily access, so we strive to remove these information asymmetries,” he wrote.
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