After nearly 10 months of investigation, Ishan Wahi, former Product Manager of Coinbase exchange, was sentenced to 2 years in prison by the court.
According to Reuters, on May 9, in Manhattan state court, US Judge Loretta Preska officially sentenced Ishan Wahi, 32 years old.
According to the prosecutor, this is the first case of insider trading in the cryptocurrency market to be tried. In February, former Coinbase CPO Ishan Wahi pleaded guilty to charges related to wire fraud.
Judge Preska judged that Ishan Wahi had “seriously abused” the trust of Coinbase company to conduct illegal activities. At the same time, efforts to cover up the tracks show that Wahi and his accomplices are aware that their actions are wrong, but still do it intentionally.
Coinbase CPO Ishan Wahi becomes the first person in the US to be convicted for insider trading in cryptocurrency.
During his trial on Tuesday, Ishan Wahi expressed regret for his actions. Wahi said that the actions affected the lives of family and friends, who were also present at the trial.
“I made a big mistake, it will follow me for the rest of my life,” Wahi said.
Previously, in September 2022, Nikhil Wahi, Ishan Wahi's brother, pleaded guilty to wire fraud. This person was officially sentenced to 10 months in prison in January 2023.
According to court documents, Ishan Wahi asked for a sentence no longer than his brother, on the grounds that other insider trading cases typically do not require jail time or short jail terms.
However, the prosecutor recommended a sentence of up to 3 years in prison for Ishan Wahi. Assistant US Attorney Noah Solowiejcyzk also said that the Wahi brothers' behavior was a continuous series of mistakes. They profited illegally not once but in a row for 10 months.
Cryptocurrency investment community noticed anomalies in Coinbase listing events since before Ishan Wahi was arrested. Source: Twitter Cobie.
Specifically, from June 2021 to April 2022, Ishan Wahi and two accomplices earned $1.5 million through insider trading.
Knowing the information about the cryptocurrencies that are about to be listed on Coinbase, Ishan Wahi silently informed his accomplices to buy and collect at a cheap price. When the official listing event takes place, the Wahi group will take profits while the crowd of investors rush to buy according to the news.
In total, Ishan Wahi performed the above method 14 times. The former CPO was only stopped after a summons by Coinbase's Security and Privacy Directorate. However, instead of being present to explain, Ishan planned to flee to India, and warned the two accomplices that the plan had failed.
Ishan Wahi was arrested shortly before boarding the plane. Mr. Philip Martin, Chief Security Officer of Coinbase affirmed that the exchange operator team will do everything to bring fairness to customers.
“All market participants have equal access to information,” said Philip Martin.
Under US law, prosecutors can charge an individual with fraud for financial gain, regardless of the type of assets involved in the case. This regulation brings many advantages to the US Department of Justice in crypto fraud cases. By comparison, the U.S. Securities and Exchange Commission (SEC) can only intervene in stock market violations.
Before that, the SEC also wanted to sue the Wahi brothers for saying that many cryptocurrencies that were traded inside were actually securities. Even so, these complaints have stopped.