Coinbase Insider Trader Gets Two-year Prison Sentence

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  • Coinbase insider trader Ishan Wahi was yesterday sentenced to two years in prison
  • The ringleader of the ‘Coinbase Three’ admitted two counts of wire fraud relating to his endeavors
  • Wahi and his gang bought up tokens before Coinbase announced their listing, using his privileged position

Coinbase insider trader Ishan Wahi was yesterday sentenced to two years in prison for trading with privileged information. Wahi, who pleaded guilty in February having initially denied the charges, his brother and another accomplice made around $1.5 million by buying up coins that Wahi knew were about to get listed on the exchange. He admitted to two counts of wire fraud and will have to pay back every penny he made from the scheme, while also facing separate charges from the Securities and Exchange Commission (SEC).

Wahi Provided Listing Tips

Wahi was the ringleader of the three-man gang known as the ‘Coinbase Three’, using his then position as Product Manager at Coinbase to suggest coins that the other two should buy in advance of their listing on the exchange. Typically the coins pumped when Coinbase announced the listing, at which point the gang sold and took the profits.

Twitter sleuths soon realized this pattern emerging thanks to the public nature of the blockchain, leading to Coinbase reiterating that it doesn’t allow any employees to trade coins it is considering listing.

Airport Arrest

Behind the scenes, Coinbase was investigating the claims and identified Wahi as the prime target. He was summoned to a meeting on May 16 last year which he agreed to attend, but instead booked himself a one-way ticket to India. He didn’t get far, however, after he was stopped by police when trying to board the plane. 

Wahi’s brother, Nikhil, pleaded guilty last year and was sentenced in January to 10 months in prison. The following month, Wahi changed his mind and followed suit. The third man, Sameer Ramani, remains at large.

The case is the first time that someone has been sentenced for insider trading involving cryptocurrencies, and it will almost certainly not be the last.