On 12th September 2022, the United States Department of Justice released a statement that Nikhil Wahi, brother of ex-Coinbase product manager Ishan Wahi, has pleaded guilty to committing cryptocurrency wire fraud using insider information secured from his brother. The statement said that Nikhil Wahi faces up to 20 years of jail time. In addition to that, he will forfeit all illegal profit.
Ishan Wahi pleaded not guilty of cryptocurrency wire fraud in August. However, his brother’s guilty plea could negatively spin his stance in the case. U.S. Attorney – Damian Williams – said that this is the first time in legal history that a person accused of cryptocurrency insider trading has pleaded guilty as charged. He also said that this case should serve as a deterrent to all cryptocurrency traders to think twice before committing any kind of fraud.
CryptoPotato reported that the Wahi brothers were arrested in July after an investigation by U.S. authorities in collaboration with Coinbase. The investigation revealed that the brothers took advantage of Nikhi Wahi’s position as a product manager at Coinbase to invest in cryptocurrencies before they were listed on the cryptocurrency exchange.
Since July 2021, Nikhil Wahi had been using insider information from his brother to buy digital assets before they were listed on Coinbase then sell them once public listing announcements were made, making profit from the “Coinbase effect.” Coinbase warned its employees that it was strictly forbidden to share listing information with anyone. It also forbade them from giving investment tips to their acquaintances. This means Ishan was aware of his crime before he was arrested.
Nikhil Wahi used accounts in other people’s names on centralized exchanges to buy the assets and cloak his tracks. According to authorities, he had created multiple wallets on the Ethereum blockchain without any identification or history to hide his information but investigators were able to track all his transactions.
Coinbase has a healthy relationship with U.S. authorities. In addition to being the first publicly traded cryptocurrency exchange, it has developed a range of software tools used by some U.S. government agencies. The Wahi Brothers scandal is a stain on the platform’s clean track record, but the speed of action to remove Wahi from his position and cooperate with the authorities may strengthen the exchange’s reputation.
Featured Image Source: www.marketwatch.com
