Coinbase earns $470,000 from ex-employee mired in insider trading case
Nikhil Wahi, the brother of a former Coinbase employee, has been ordered by a New York District Court to pay nearly $470,000 to the US cryptocurrency exchange for his participation in an insider trading scheme.
Nikhil Wahi, who is the brother of ex-Coinbase product manager Ishan Wahi, will start making restitution payments while serving time in prison. This case is believed to be the first insider trading case involving cryptocurrency. Nikhil must pay the amount in full within 20 years of his release from prison, and it represents the sum Coinbase expended on legal services related to the Department of Justice’s inquiry.
Ishan Wahi was charged by the U.S. Department of Justice (DOJ) last year with wire fraud for sharing information with his brother, Nikhil Wahi, and friend Sameer Ramani about which tokens would be listed on the exchange before they were publicly available. He pleaded guilty to making trades using the confidential information in September 2021 and was then sentenced to 10 months in prison for his involvement in a wire fraud conspiracy after being convicted in January 2022.
In 2021, Coinbase was also embroiled in insider trading claims involving its listing on the NASDAQ stock exchange.
According to reports, several Coinbase executives and early investors sold shares in the company shortly after its listing, causing some to speculate that they may have engaged in insider trading. Specifically, reports alleged that Coinbase insiders were aware that the company’s revenue and earnings projections were going to fall short of market expectations, and that they sold shares in the company to avoid losses.
The allegations were further fueled by the fact that Coinbase CEO Brian Armstrong sold a significant portion of his personal stake in the company shortly after its listing, leading some to question his confidence in the company’s long-term prospects.
At the time, Coinbase denied any wrongdoing, and said that the trades in question were pre-scheduled sales that had been approved in advance by the Securities and Exchange Commission (SEC). However, the controversy led to calls for increased scrutiny of insider trading in the cryptocurrency industry, and underscored the challenges of regulating a market that is still largely uncharted territory. As of now, there have been no formal charges filed against Coinbase or any of its executives in relation to this case.
