Ex-Coinbase Employee Charged With Insider Trading Over Crypto Listings

pcmag.com:

A former product manager at Coinbase allegedly helped his brother and friend rake in $1.5 million through insider trading tips about which cryptocurrencies the company was going to list. 

The employee, Ishan Wahi, shared the insider trading tips at least 14 times starting around June 2021 to as recently as April, according(Opens in a new window) to federal investigators. The insider tips were valuable because whenever Coinbase lists a new cryptocurrency on its exchange platform, it also helps bring the currency into the mainstream, thereby increasing its value. 

Wahi, who began working at Coinbase in 2020, had access to the information through a private messaging channel reserved for a small number of employees “with direct involvement in the Coinbase asset listing process,” the Justice Department said. Both Wahi’s brother, Nikhil Wahi and friend, Sameer Ramani, then exploited the tips to buy at least 25 different crypto assets. After the currencies were listed on Coinbase, the two then sold off the assets for at least $1.5 million in profit. 

To conceal their scheme, Wahi’s brother and Ramani created internet accounts using other people’s names and anonymous Ethereum-based digital wallets. 

However, it seems Coinbase itself caught on to the scheme in April when Wahi’s brother and Ramani bought large quantities of at least six crypto assets the company was considering listing. Both a Twitter user(Opens in a new window) and Coinbase’s own Chief Security Officer, Philip Martin, noticed(Opens in a new window) the high-volume trades over the Ethereum blockchain. In late April, the company then published a blog post(Opens in a new window), declaring it had zero tolerance for insider trading. 

In May, Coinbase then summoned