A former Coinbase product manager pleaded guilty on Tuesday in what US prosecutors have called the first insider trading case involving cryptocurrency, his defence lawyer said in a court hearing.
Ishan Wahi, 32, pleaded guilty to two counts of conspiracy
to commit wire fraud, after initially pleading not guilty last year.
Prosecutors said Wahi shared confidential information with
his brother Nikhil and their friend Sameer Ramani about forthcoming
announcements of new digital assets that Coinbase would let users trade.
"I knew that Sameer Ramani and Nikhil Wahi would use
that information to make trading decisions," Ishan Wahi said during
Tuesday's hearing in federal court in Manhattan. "It was wrong to
misappropriate and disseminate Coinbase's property."
Nikhil Wahi and Ramani were charged with using Ethereum
blockchain wallets to acquire digital assets and trading at least 14 times
before Coinbase announcements between June 2021 and April 2022.
The announcements typically caused the assets to rise in
value and generated at least $1.5 million in illicit gains, prosecutors have
said.
Nikhil Wahi pleaded guilty in September to a wire fraud
conspiracy charge, and in January was sentenced to 10 months in prison. Ramani
is at large.
As part of a plea deal, prosecutors stipulated that
sentencing guidelines called for Ishan Wahi to be imprisoned for between 36 and
47 months. US District Judge Loretta Preska scheduled his sentencing hearing
for May 10.
Coinbase is one of the world's largest cryptocurrency
exchanges. The company has said it shared its findings from an internal probe
into the trading with prosecutors.
On Monday, Ishan Wahi asked a judge to dismiss a parallel
lawsuit from the Securities and Exchange Commission (SEC), saying that charges
represent an "abuse of power" by the agency. At issue is whether nine
tokens listed on Coinbase were, in fact, securities and subject to SEC regulation.
A spokesperson for the SEC declined to comment.
In pleading guilty to the criminal charges on Tuesday, Ishan Wahi said he did not believe any of the relevant tokens were securities. Noah Solowiejczyk, a prosecutor, said the question of whether or not the tokens are securities was not an element of prosecutors' case. © Reuters
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