SEC charges ex-Coinbase employee, his brother, and his friend in the first-ever crypto insider trading case
A former Coinbase product manager, along with his brother and friend, has been charged with «wire fraud conspiracy in connection with a scheme to commit insider trading in cryptocurrency assets by using confidential Coinbase information,» according to attorneys from the Southern District Court in Manhattan(opens in new tab).
The complaint filed in the federal district court in Seattle where Coinbase is located charges Ishan and Nikhil Wahi, along with Sameer Ramani, with «violating the antifraud provisions of the securities laws and seeks permanent injunctive relief, disgorgement with prejudgment interest, and civil penalties.» Translating the legalese, the complaint alleges: They've been doing insider trading, they must immediately stop insider trading, and they better pay back what they earned, on top of a fine.
The trio earned over $1.1 million in «an alleged insider trading scheme that repeatedly used material, nonpublic information to trade ahead of Coinbase listing announcements,” said Carolyn M. Welshhans, acting chief of the SEC's crypto and cyber unit in a statement(opens in new tab).
According to the filing, the almost year-long scheme involved Ishan Wahi providing information about upcoming token listings on Coinbase to his brother and friend. They then allegedly used this information to buy cryptocurrencies for cheap before the Coinbase announcement and sell them off fast for profit once their price went up. Whenever Coinbase announces that a new cryptocurrency is coming to its platform, the crypto in question often skyrockets in value. This is known as the „Coinbase effect.“
Wahi and Ramani made at least 14 transactions involving 25 crypto assets; 9 were identified as securities that fall under the
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