Damien Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”) today announced the unsealing of an indictment against ISHAN WAHI, former Product Manager at Coinbase Global, Inc. (“Coinbase”), NIKHIL WAHI and SAMEER RAMANI, with conspiracy to commit wire fraud and wire fraud in connection with a scheme to conduct insider trading in cryptocurrency assets by using Coinbase’s confidential information about which cryptoassets were planned to be involved on Coinbase exchanges. ISHAN WAHI and NIKHIL WAHI were arrested this morning in Seattle, Washington and will be arraigned today in the United States District Court for the Western District of Washington. SAMEER RAMANI was also charged today and is still at large.
US Attorney Damien Williams said: “Today’s charges are a further reminder that Web3 is not a lawless zone. Just last month I announced the first insider trading case involving NFTs, and today I’m announcing the first insider trading case involving cryptocurrency markets. Our message with these allegations is clear: fraud is fraud, whether it happens on the blockchain or on Wall Street. And the Southern District of New York will continue to be relentless in bringing fraudsters to justice wherever we find them.
FBI Assistant Director Michael J. Driscoll said: “Although the allegations in this case relate to transactions that took place on a crypto exchange – not a more traditional financial market – they still constitute insider trading. The defendants allegedly made illegal trades in at least 25 different crypto assets and realized ill-gotten gains totaling approximately $1.5 million. Today’s action should demonstrate the FBI’s commitment to protecting the integrity of all financial markets – both “old” and “new.”
As alleged in the indictment unsealed in Manhattan federal court[1]:
Background
At all relevant times, Coinbase was one of the largest cryptocurrency exchanges in the world. Coinbase users can acquire, exchange and sell various crypto assets through online user accounts with Coinbase. Periodically, Coinbase added new crypto assets to those that could be traded through its exchange, and the market value of crypto assets usually increased significantly after Coinbase announced that it would list a particular crypto asset. Accordingly, Coinbase has kept such information strictly confidential and prohibited its employees from sharing such information with others, including by providing “advice” to any person who might trade based on such information.
From approximately October 2020. ISHAN WAHI worked at Coinbase as a product manager assigned to Coinbase’s asset listing team. In this role, ISHAN WAHI was involved in the highly confidential process of listing crypto assets on Coinbase’s exchanges and had detailed and in-depth knowledge of which crypto assets Coinbase planned to list and the timing of public announcements for those crypto asset listings. Beginning at least August 2021 and continuing through May 2022, ISHAN WAHI was a member of a private Coinbase messaging channel reserved for a small number of Coinbase employees with direct involvement in the Coinbase asset listing process. The private channel was used to discuss, among other things, “exact announcement / launch dates + timelines,” which Coinbase is unwilling to share with all of its employees.
The insider trading scheme
On at least 14 occasions, beginning at least June 2021 and continuing through April 2022, ISHAN WAHI knew in advance both that Coinbase planned to list certain crypto assets and the timing of Coinbase’s public announcements about those listings with assets and misappropriated this confidential information to Coinbase by tipping either his brother, NIKHIL WAHI, or ISHAN WAHI’s friend and associate, SAMEER RAMANI, so that they could make profitable trades in these crypto assets prior to the public listing announcements on Coinbase.
After receiving advice from ISHAN WAHI, NIKHIL WAHI and RAMANI used anonymous Ethereum blockchain wallets to acquire crypto assets shortly before Coinbase publicly announced that it was listing or considering listing these crypto assets on its exchanges. Following Coinbase’s public listing announcements, NIKHIL WAHI and RAMANI sold the crypto assets at a profit. Based on confidential information provided by ISHAN WAHI, NIKHIL WAHI and RAMANI, collectively traded shortly before at least 14 separate Coinbase public listing announcements regarding at least 25 different crypto assets. As a result of the insider trading scheme, NIKHIL WAHI and RAMANI collectively generated realized and unrealized profits totaling at least approximately $1.5 million.
To conceal their purchases of crypto assets prior to Coinbase’s listing announcements, NIKHIL WAHI and RAMANI used centralized exchange accounts held in the names of others and transferred funds, crypto assets and proceeds from their scheme through multiple anonymous Ethereum blockchain wallets. NIKHIL WAHI and RAMANI also regularly created and used new Ethereum blockchain wallets with no prior transaction history to further conceal their involvement in the scheme.
ISHAN WAHI’s attempt to escape from the United States
On April 11, 2022, Coinbase announced that it was considering possibly listing dozens of crypto assets on its exchanges. Based on confidential Coinbase information provided by ISHAN WAHI, RAMANI led multiple anonymous Ethereum blockchain wallets to purchase large amounts of at least six of the crypto assets that were to be included in Coinbase’s April 11, 2022 listing announcement.
Shortly after RAMANI traded ahead of Coinbase’s April 11 listing announcement, on April 12, 2022, a Twitter account well-known in the crypto community tweeted about the Ethereum blockchain wallet “which bought hundreds of thousands of dollars in tokens presented exclusively on Coinbase Asset Listing published about 24 hours before it was published.” The trading activity referred to in the April 12 tweet was the trade caused by RAMANI. Coinbase then responded publicly on Twitter, noting that it had already opened an investigation into the matter, and several weeks later stated in a public blog post that any Coinbase employee who leaked confidential company information would be “immediately terminated and referred to relevant authorities (potentially for criminal prosecution) ).’
On May 11, 2022, Coinbase’s Director of Security Operations emailed ISHAN WAHI to inform him that he was required to attend an in-person meeting regarding Coinbase’s asset listing process at Coinbase’s Seattle, Washington office on Monday 16 May 2022 ISHAN WAHI confirmed he would attend the meeting.
On the evening of Sunday, May 15, 2022, ISHAN WAHI purchased a one-way flight to India that was scheduled to depart the following day shortly before ISHAN WAHI was interviewed by Coinbase. Before boarding the flight, ISHAN WAHI falsely told Coinbase officials that he had already left for India, but he had not. In the hours between booking the flight and his scheduled departure, ISHAN WAHI called and texted NIKHIL WAHI and RAMANI about the Coinbase investigation and sent them a photo of the messages he received on May 11, 2022 from the Director of Security Operations at Coinbase. Before boarding the flight to India on May 16, 2022, ISHAN WAHI was stopped by law enforcement and prevented from leaving the country.
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ISHAN WAHI, 32, of Seattle, Washington, is charged with two counts of conspiracy to commit wire fraud and two counts of wire fraud, each of which carries a maximum sentence of 20 years.
NIKHIL WAHI, 26, of Seattle, Washington, is charged with one count of conspiracy to commit wire fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years.
SAMEER RAMANI, 33, of Houston, Texas, is charged with one count of conspiracy to commit wire fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years.
Statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as each defendant’s sentence will be determined by a judge.
Mr. Williams praised the investigative work of the FBI. He also acknowledged the cooperation of the Justice Department’s National Cryptocurrency Enforcement Team as well as the Securities and Exchange Commission, which separately launched civil suits against the defendants today. Mr. Williams further thanked Coinbase Global, Inc. for her cooperation with the investigation.
This case is being handled by the Office’s Securities and Commodity Fraud Task Force. Assistant United States Attorneys Noah Soloveitchik and Nicholas Roos are prosecuting.
The allegations in the indictment are mere accusations and defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase indicates, the entire text of the indictment and the description of the indictment set forth herein are allegations only, and each fact described must be treated as an allegation.
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