The Securities and Exchange Commission recently announced that it filed insider trading charges against former Coinbase product manager Ishan Wahi, his brother Nikhil Wahi, and his friend Sameer Ramani for their participation in a scheme involving trades made ahead of multiple Coinbase announcements regarding which crypto assets would be listed on its trading platform.
According to the SEC’s complaint, Ishan was employed as a manager in the Assets and Investing Products Group at Coinbase, one of the largest crypto asset trading platforms in the US. Ishan, who acknowledged that he had a duty to keep listing information confidential, was routinely entrusted by Coinbase with information regarding what crypto assets would be supported on the trading platform and when the company planned to make listing announcements. According to the SEC, Ishan repeatedly tipped Nikhil and Ramani with material nonpublic information regarding the content to be featured on the platform and the timing of the listings ahead of multiple Coinbase announcements in 2021 and 2022. Based on these tips, Nikhil and Ramani purchased crypto assets ahead of more than 10 listing announcements - at times only minutes before the announcement - and traded in at least 25 crypto assets, at least 9 of which were crypto asset securities. From their participation in the scheme, Nikhil and Ramani allegedly generated more than $1.1 million in illicit profits.
The SEC also reports that when Nikhil and Ramani’s suspicious trades were discovered by the company, Coinbase’s Director of Security Operations requested an interview with Ishan – an interview that Ishan scheduled but never attended. Instead, Ishan allegedly sent an email to coworkers indicating that he had to urgently fly back to India and would be “out indefinitely.” Ishan also allegedly placed several calls to his brother and friend on the day of the missed interview. According to the complaint, Ishan was ultimately prevented from leaving the country by law enforcement officials.
The SEC filed its complaint on July 21, 2022 in the US District Court for the Western District of Washington charging all three defendants with violating the antifraud provisions in Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC is also seeking to permanently enjoin the defendants from further securities violations and is requesting the payment of civil penalties and disgorgement of any illicit proceeds resulting from the unlawful trades.
On July 21, 2022, the US Attorney's Office for the Southern District of New York also announced that parallel criminal charges were filed against all three defendants.