Nikhil Wahi, a 26-year-old Indian citizen currently staying in the US, has pleaded guilty in the first- ever crypto insider trading case in the US, along with his brother Ishan, a former employee at Coinbase, and their Indian-American friend. They were charged with a wire fraud conspiracy charge in July.
Coinbase is one of the largest crypto exchanges. Nikhil has been accused of buying crypto tokens before they were about to be listed on Coinbase, with the information he obtained from his brother Ishan, who is a former Coinbase employee. Ishan faces up to 20 years in a US federal prison if convicted guilty.
Damian Williams, a US Attorney involved with the case said: “Less than two months after he was charged, Nikhil Wahi admitted in court today that he traded in crypto assets based on Coinbase’s confidential business information to which he was not entitled. For the first-time ever, a defendant has admitted his guilt in an insider trading case involving the cryptocurrency markets.”
Crypto Insider Trading Case
In October 2020, Ishan worked as a product manager in the asset listing department at Coinbase, and often dealt with highly classified process of listing crypto assets on Coinbase’s exchanges. He had in-depth and advanced knowledge of the crypto assets that Coinbase was planning to list, as well as the timeframe of the public announcements about those crypto asset listings.
Nikhil Wahi used anonymous Ethereum Blockchain wallets to acquire those crypto assets on numerous occasions between July 2021 and May 2022, after receiving tips from his brother, Ishan.
Following Coinbase’s public listing announcements, Nikhil then profitably sold the crypto assets on multiple occasions.
Nikhil used accounts at centralised exchanges held in the names of others to conceal his purchases of crypto assets ahead of Coinbase listing announcements according to the statements made in court, and transferred funds, crypto assets, and proceeds of their scheme through multiple anonymous Ethereum Blockchain wallets.
To conceal his involvement in the scheme, Nikhil also created and regularly used new Ethereum Blockchain wallets with no prior transaction history.
“I knew that it was wrong to receive Coinbase’s confidential information and make trades based on that confidential information,” Nikhil Wahi told the judge.
Nikhil is scheduled to be sentenced by Judge Preska on December 13, 2022. Ishan has, however, pleaded not. His next hearing in court is scheduled for March 22, 2023.
The accused were arrested following detailed investigations into crypto insider trading by the Federal Bureau of Investigation (FBI) and other US federal agencies.