US Justice Department Arrests Former Coinbase Manager Over Insider Trading Allegations
- The statement lists the affected cryptos on Coinbase including POWR, ENS, GALA, TRIBE, XYO, and ALCX.
On Thursday, the United States Department of Justice (DoJ) arrested Ishan Wahi, a former Coinbase employee, and two others, Sameer Ramani and Nikhil Wahi, over links with insider trading and wire fraud. An official statement from the DoJ said that Ishan Wahi told his brother, Wahi and Ramani, details about cryptos that Coinbase was about to list before the exchange listed them.
The US Security and Exchange Commission (SEC) also brought allegations of insider trading against the trio. A US Attorney, Damian Williams from the New York Southern District, stated that it is the second time the DoJ is bringing a crypto-related insider trading case.
Further Notes on Coinbase Insider Trading Allegations
Reportedly, Wahi gave information about 14 such Coinbase listings. The DoJ’s statement claims that the trio brought up to 25 percent of these cryptos using pseudonymous exchange accounts and Ethereum wallets. Hence, they realized nearly $1.5 million in profits. However, the SEC said they made about $400,000 less the amount estimated by the DoJ.
The statement lists the affected cryptos as POWR, ENS, GALA, TRIBE, XYO, and ALCX. The DoJ allegation also referred to a tweet by Cobie, who revealed that an Ethereum address purchased hundreds of thousands of dollars worth of tokens before Coinbase listed such tokens.
The DoJ also said that law enforcement had been secretly monitoring Ishan Wahi’s movements before his eventual arrest on Thursday. Two months ago, officials prevented him from moving out of the US. Records showed that he was on his way to India.
In the DoJ statement, Williams said it is the first time there will ever be a crypto-related insider trading case. He added that the DoJ sees fraud as fraud, whether it happens on Wall Street or the blockchain.
Williams also said New York’s Southern District would never stop bringing perpetrators to book regardless of location. Notably, the DoJ isn’t accusing Coinbase of any misconduct. It claims that the exchange was also investigating various cases of insider trading.
The SEC claims that some of the affected cryptos were securities in its submissions. The SEC’s complaint states that crypto asset security is an asset created or transferred through blockchain or distributed ledger technology. The SEC also states that crypto assets by this definition are also known as tokens, coins, virtual currencies, and digital assets.
The financial watchdog adds that the federal securities laws classify these crypto assets as ‘security.’ While the Wahi brothers already have a lawyer to represent them, Ramani doesn’t have a legal representation yet. Coinbase’s chief security officer, Philip martin, adds that the exchange is sharing reports of its internal investigation on the matter with prosecutors.
Martin tweeted that Coinbase is committed to ensuring that all the market players can access similar information. In June, Manhattan’s Federal Prosecutors arrested an ex-OpenSea product manager over allegations of insider trading.