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December 8, 2022
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Exchange News

First Case of Insider Trading at Coinbase in cryptocurrency

  • Former product manager of Coinbase, Ishan Wahi tipped off on public listing to make illegitimate profits.
  • The accused tried to flee the United States to India.
  • Lawyers representing Ishan Wahi decline the claims made. 

    Recently, the first-ever case of insider trading in cryptocurrencies at one of the world’s largest cryptocurrency exchanges – Coinbase was identified , investigated and intimated to the US Securities and the Exchange Commission(SEC). The SEC has registered a complaint against the culprits at the US District Court for the Western District of Washington.

    One of the culprits, Ishan Wahi was the former product manager of Coinbase and was involved in handling the extremely confidential process of asset listing. He shared this confidential information with his brother Nikhil Wahi and their friend Sameer Ramani to make trades before the public-listing announcements. The information was shared for almost 11 months before the fraud was detected and nearly one million illegitimate profits were made. They have used various anonymous Ethereum blockchain digital wallets to camouflage their trades, informed the prosecutors.

    Ishan Wahi, also attempted to flee the United States once he was asked for an in-person meeting by Coinbase’s director of security operations. Regardless, he was stopped by the US Law Enforcement before he could board the plane.

    The registered complaint said – “From at least June 2021 through April 2022, Ishan Wahi (‘Ishan’), a manager in Coinbase’s Assets and Investing Products group, repeatedly tipped material, nonpublic information about the timing and content of Coinbase’s ‘listing announcements’ – in which Coinbase announced that crypto assets would be listed on its trading platform – to his brother Nikhil Wahi (‘Nikhil’) as well as his close friend Sameer Ramani (‘Ramani’). Nikhil and Ramani used this information to trade ahead of multiple listing announcements, earning at least $1.1 million in illicit profits”

    The SEC has further explained,
    “As alleged in greater detail below, each of the nine companies that offered these crypto asset

    securities and their promoters further emphasized, among other things, their efforts to get their crypto asset securities listed on secondary trading platforms, and the critical role that executives and others at the company played in turning the company into a success, thereby increasing the value of the crypto asset security. In other words, each of the nine companies invited people to invest on the promise that it would expend future efforts to improve the value of their investment.

    “These hallmarks of the definition of a security continue to be true for the nine crypto asset securities that are the subject of the trading in this complaint, including continuing representations by issuers and their management teams regarding the investment value of the

tokens, the managerial efforts that contribute to the tokens’ value, and the availability of secondary markets for trading the tokens. Thus, at all times relevant to the conduct alleged in this complaint, a reasonable investor in the nine crypto asset securities would continue to look to the efforts of the issuer and its promoters, including their future efforts, to increase the value of their investment.“

However, the lawyers representing Ishan Wahi say that their client is innocent and “intends to defend himself vigorously against the charges made and in the SEC action”.

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