Ex-Coinbase manager seeks to cap prison sentence in insider trading case
Coinbase’s product manager, who pleaded guilty to sharing insider information in order to profit from cryptocurrency trading, argued that he should be given a sentence of just 10 months, despite sentencing guidelines recommending a minimum of three years.
Prosecutors said Ishan Wahi shared confidential information with his brother and their friend about new digital assets that Coinbase was planning to list on its platform. He is scheduled for a sentencing hearing on May 9 in New York.
“The Defendant respectfully submits that a sentence of no more than 10 months incarceration, together with several other consequences of Ishan’s conviction, would impose a sufficient, but not excessive, punishment for the crimes of conviction,” his lawyers said in court filings.
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.
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. He pleaded guilty to making trades using 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.
Nikhil will start making restitution payments while serving time in prison. This case is believed to be the first insider trading case involving cryptocurrency. He 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.
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.
