Table of Contents
A former Coinbase employee has been sentenced to two years in prison after pleading guilty to charges of insider trading.
The sentencing was carried out by US District Judge Loretta Preska, who sentenced Wahi in the Manhattan Federal Court.
The Insider Trading Case
Ishan Wahi was arrested in 2022 and charged with insider trading after it was discovered that he was providing his brother and another individual, Sameer Rahmani, with insider information about upcoming listings on Coinbase. According to authorities probing the case, Wahi’s brother and the unnamed individual made over $1 million between June 2021 and April 2022, thanks to information given by Wahi.
During the hearing, Judge Preska stated that Wahi’s scheme involved “massive abuse of Coinbase’s trust.” The judge added that Wahi and the co-defendant’s attempts to cover up their actions showed they knew they were wrong in carrying on with the scheme. The brother, Nikhil Wahi, earlier pleaded guilty to a charge of wire fraud conspiracy and was sentenced to 10 months in prison. Meanwhile, Ramani has evaded the authorities thus far.
Wahi Expresses Remorse
At the hearing, Ishan Wahi expressed regret and remorse over his actions and their impact on friends and family, several of whom were in attendance in court. Wahi stated during the hearing that he had made a huge mistake, one that would follow him for the rest of his life. Noah Solowiejczyk, the assistant US Attorney, contended that Wahi’s actions were not a one-off mistake and instead were a stream of tips to his brother spanning over ten months.
Wahi also asked the court to give him a sentence no longer than his brothers and cited examples of other insider trading cases that resulted in little or no prison time for the people involved. However, prosecutors called for Wahi to be jailed for over three years to deter other individuals from misusing corporate information. Currently, prosecutors are able to charge fraud in cases where deception was utilized to seek financial gain, regardless of the type of asset involved.
This allows the United States Justice Department more leeway to go after any crypto-related fraud than its civil counterpart, the United States Securities and Exchange Commission. The SEC is limited to monitoring the securities markets. In several of its lawsuits, the Securities and Exchange Commission, including one filed against the Wahi brothers, stated that most digital assets are securities. Court papers have shown that the SEC and Ishan Wahi had reached a settlement, while Nikhil Wahi is in talks to reach a settlement.
Second Crypto-Related Insider Trading Case
This is the second case related to cryptocurrency insider trading brought by the United States Department of Justice (DOJ). The first case resulted in a guilty verdict and involved the former head of product at OpenSea, one of the most prominent non-fungible token (NFT) platforms. The guilty verdict was reached on the 3rd of May when Nate Chastain was convicted of wire fraud and money laundering. Chastain used insider knowledge to determine which NFTs were about to be listed on the OpenSea platform, making significant profits in the process. While Chastain has not been sentenced as yet, he faces a maximum prison sentence of 40 years.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.