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First crypto insider trading defendant sentenced

The brother of a former Coinbase employee was sentenced to ten months in prison for his role in a revolutionary bitcoin insider trading fraud.

Nikhil Wahi, 27, of Seattle, was sentenced to jail and ordered to repay $892,500 in forfeiture by a U.S. District Court judge, according to a press release issued by U.S. Attorney Damian Williams on Tuesday. In September, Wahi, the brother of former Coinbase manager Ishan Wahi, pled guilty to one count of wire fraud conspiracy.

Ishan Wahi launched the plan in October 2020 by passing on private information about which bitcoin assets were scheduled to be listed on Coinbase's platform to his brother, who subsequently purchased the assets before they were listed. Prosecutors claimed that Nikhil Wahi planned to profit from the sale of the assets after they were listed.

“At a time when the cryptocurrency markets have been plagued by fear, uncertainty, and doubt, insider trading creates the impression that everything is rigged and that only people with secret advantages can make a real buck,” said Williams in the press release. “Today’s sentence makes clear that the cryptocurrency markets are not lawless. There are real consequences to illegal insider trading, wherever and whenever it occurs.”

Ishan Wahi was arrested in July and charged with two charges of wire fraud and two counts of wire fraud conspiracy for his alleged part in supplying insider information to his brother and friend, Sameer Ramani. Ishan Wahi was granted bail in August, and his case is still pending.

According to court documents, Ramani has not been arrested and remains at large.

The SEC filed a related complaint in U.S. District Court for the Western District of Washington against Ishan Wahi, Nikhil Wahi, and Ramani alleging violations of federal securities legislation. According to court records, the charges, including those against Nikhil Wahi, are still pending.

According to authorities, the insider trading plan garnered the three men between $1 and $1.5 million in ill-gotten earnings.

When asked for comment, Coinbase pointed to an April blog post written by CEO Brian Armstrong, which was updated in July, in which he defended the company and claimed it had "zero tolerance" for insider trading on its platform and that it "takes allegations of improper use of company information very seriously."

Coinbase has enhanced its processes for listing digital assets on its platform, according to the blog, including investing more money in screening assets to prevent potential frontrunning and delisting assets that "look to be experiencing poor behaviour."

“We work hard to ensure all market participants have access to the same information, not only to protect our company but to protect our customers. We are committed to doing our part to ensure all traders are operating on an even playing field, which is critical to furthering Coinbase’s mission of promoting economic freedom,” Armstrong wrote on the blog. By fLEXI tEAM

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