On February 7, 2023, Ishan Wahi, former product manager at Coinbase Global, Inc., pleaded guilty to counts one and two of a July 2022 indictment charging him with conspiracy to commit wire fraud.
According to the indictment, between October 2020 and May 2022, Wahi was employed by Coinbase, a major online cryptocurrency exchange platform, as a product manager assigned to the asset listing team. Wahi’s job was to support the confidential process of listing crypto assets on Coinbase’s exchanges. Crypto asset values generally rose substantially following announcements by Coinbase that the asset would be listed or was under consideration for listing. The company’s written policies prohibited employees involved in supporting new crypto assets on the platform from disclosing confidential information to any person outside of Coinbase, and from purchasing new assets in advance of the company’s public announcements. An additional “enhanced trading policy” also applied to Wahi as a member of Coinbase’s asset listing team. This policy required Wahi to report his digital asset holdings, and to request permission from Coinbase prior to trading in digital assets on other platforms. In August 2021, Coinbase assigned Wahi to a private messaging channel reserved for a limited number of employees on the asset listing team, in order to provide a safe and private forum to discuss launch dates and other listing details. As alleged in the indictment, Wahi knew of Coinbase’s policies regarding this confidential information, acknowledged and signed the company’s policies surrounding confidentiality, and assured his colleagues at Coinbase that he was maintaining the confidentiality of the information.
However, as detailed in the indictment, Wahi breached his duty of confidentiality, misappropriating confidential business information on multiple occasions, and tipping his brother, Nikhil Wahi, and his friend, Sameer Ramani, enabling them to gain approximately $1.5 million by trading in at least 25 different crypto assets based on the misappropriated information. In order to conceal their crypto asset trades, Ramani and Nikhil Wahi used accounts at centralized exchanges held in other people’s names, later transferring the proceeds of their activity through anonymous Ethereum blockchain wallets. Nikhil Wahi and Sameer Ramani were indicted along with Ishan Wahi.
In April 2022, responding to social media posts, Coinbase disclosed that it had begun an investigation of the suspicious activity, adding a few days later that it was investigating whether “someone inside Coinbase” leaked the company’s confidential information to outsiders. In May 2022, Wahi was asked by Coinbase’s director of security to attend an in-person interview – the company’s employees generally work remotely – several days later. The day before the scheduled meeting, Wahi attempted to flee the United States, after informing Nikhil Wahi and Sameer Ramani of the company’s ongoing investigation.
In conjunction with Wahi’s guilty plea, a consent preliminary forfeiture order was entered against him, allowing the United States to obtain possession of two Ethereum wallets holding 10.97 Ethereum and 9,440 Tether. Sentencing is scheduled for May 10, 2023.
In September 2022, Wahi’s brother Nikhil, the tippee, pleaded guilty to one count of conspiracy to commit wire fraud; he was sentenced on January 10, 2023 to 10 months in prison, and ordered to pay $892,500 in forfeiture. A parallel action brought by the US Securities and Exchange Commission alleging insider trading has not been adjudicated.