On Wednesday, a former Coinbase Global Inc product manager and his younger brother pleaded guilty to wire fraud charges in the United States. This was what U.S.prosecutors called the first case of insider trading involving cryptocurrency.
Ishan Wahi (32), a former product manager was arrested in Seattle last month on suspicion of sharing confidential information with Nikhil, his brother, and Sameer Ramani regarding upcoming announcements about new digital assets Coinbase would allow users trade.
Nikhil Wahi pleaded not guilty at Wednesday’s arraignment in Manhattan federal court before U.S. district Judge Loretta Preska. Ramani, who was also indicted, is still at large.
Prosecutors claimed that Nikhil Wahi, Ramani and others used ethereum blockchain wallets for the acquisition of the assets. They also traded at least 14 times prior to Coinbase announcements in April 2022 and June 2021. Prosecutors stated that the announcements caused assets to increase in value and generated illicit gains of at least $1.5million.
Coinbase is the largest cryptocurrency exchange in the world.
David Miller, an attorney for Ishan Wahi, stated that the charges should be dropped because insider trading must involve commodities or securities and this case did.
Miller said that Coinbase had tested new tokens before they were publicly listed, which means that the information his client was accused sharing was not confidential.
Noah Solowiejczyk (prosecutor) countered that the information wasn’t public and that the prosecution was consistent in previous cases of wire fraud.
U.S. regulators are considering how to supervise cryptocurrency trading.
Coinbase did not respond immediately to a request for comment. The company stated last month that it had shared its findings from an internal investigation into trading with prosecutors.
The bail for each of the Wahi brothers was set to $1 million. The brothers are due to appear in court on March 22. They have been charged with civil violations by the U.S. Securities and Exchange Commission.