1 of 3 | A Coinbase employee pleaded guilty to insider trading on Tuesday, the first person to be charged in a cryptocurrency insider trading case. File Photo by John Angelillo/UPI | License Photo
Feb. 8 (UPI) -- A former employee of the cryptocurrency exchange Coinbase pleaded guilty to insider trading by using confidential information from his company to determine which crypto assets would be listed on the exchange.
Ishan Wahi, a former Coinbase product manager, admitted on Tuesday to giving information to others about cryptocurrencies that the company was going to be listing on its platform. Wahi is the first person to plead guilty to an insider trading case involving cryptocurrency, U.S. Attorney Damian Williams said.
"Whether it occurs in the equity markets or the crypto markets, stealing confidential business information for your own personal profit or the profit of others is a serious federal crime," said Williams.
Beginning in October 2020, Wahi worked at Coinbase as a product manager on the asset listing team. He used his job to provide confidential information about which crypto assets would be listed, to his brother Nikhil Wahi and Sameer Ramani. Wahi and Ramani then sold the assets for a profit after they were announced.
Prosecutors said the three men made $1.5 million in illegal profits.
Wahi faces a maximum of 20 years in prison and is set to be sentenced on May 10. Nikhil Wahi was sentenced to 10 months in prison. Ramani has also been charged.
The charge comes as cryptocurrency exchanges face increased turbulence and scrutiny following the collapse of FTX.
Sam Bankman-Fried, the founder of FTX, pleaded not guilty last month to eight federal charges ranging from wire fraud and conspiracy to commit money laundering, to conspiracy by misusing customer funds as prosecutors said he used users' funds to purchase expensive real estate and to donate millions to political campaigns.
In the wake of the FTX scandal, Coinbase announced that it would lay off about 950 workers and incur $149 million to $163 million in restructuring efforts, including severance packages and termination benefits, citing "market conditions" for the move.
Last month, the New York State Department of Financial Servicesordered Coinbase to pay $50 million to settle charges it failed to conduct proper background checks on new user accounts and another $50 million to bolster its compliance program.