© Reuters. FILE PHOTO: A representation of the cryptocurrency is seen in front of the Coinbase logo in this illustration taken March 4, 2022. REUTERS/Dado Ruvic/Illustration/By Luke Cohen
NEW YORK (Reuters) – A former Coinbase (NASDAQ::Global Inc.) product manager pleaded guilty Tuesday in what U.S. prosecutors called the first cryptocurrency-related insider trading case, his defense attorney said at a court hearing.
Ishan Wahi, 32, pleaded guilty to two counts of conspiracy to commit wire fraud, after initially pleading not guilty last year.
Prosecutors said Wahi shared confidential information with his brother Nikhil and their friend Sameer Ramani about upcoming announcements of new digital assets that Coinbase will allow users to trade.
“I have learned that Samir Ramani and Nikhil Wahi will use that information to make trading decisions,” Ishan Wahi said during the hearing Tuesday in Manhattan federal court. “It was wrong to embezzle and publicize Coinbase property.”
Nikhil Wahi and Ramani were accused of using Ethereum blockchain wallets to acquire and trade digital assets at least 14 times prior to the Coinbase announcements between June 2021 and April 2022.
Prosecutors said the ads typically caused a rise in the value of assets and generated at least $1.5 million in ill-gotten gains.
Nikhil Wahi had pleaded guilty in September to wire communications conspiracy, and in January he was sentenced to 10 months in prison. Ramani is free.
As part of the plea bargain, prosecutors stipulated that sentencing guidelines called for Ishan Wahi to be imprisoned for between 36 and 47 months. US District Judge Loretta Prisca has set a sentencing hearing for May 10.
Coinbase is one of the largest cryptocurrency exchanges in the world. The company said it had informed the Public Prosecution of its findings from an internal investigation into the deal.
Ishan Wahi on Monday asked a judge to dismiss a parallel SEC lawsuit, saying the charges represented an “abuse of power” by the agency. The dispute revolves around whether the nine tokens listed on Coinbase are actually securities and are subject to SEC regulations.
A spokesman for the Securities and Exchange Commission declined to comment.
In his guilty plea to the criminal charges on Tuesday, Ishan Wahi said he did not believe any of the related tokens were securities. The issue of whether the tokens are securities is not an element in the plaintiffs’ case, said Noah Solwijk, the attorney general.
