What’s been called the first cryptocurrency-related insider trading case has resulted in prison time for one Nikhil Wahi, who pled guilty to conspiracy to commit wire fraud, according to Bloomberg and Reuters.
Last summer, Wahi was accused of getting information from his brother, a now-former project manager at Coinbase, and using it to buy coins before they were listed for sale on the popular exchange. This reportedly made him around $892,500 — which he’ll have to pay back according to the terms of his sentencing, in addition to spending 10 months in prison.
The case, brought on by the Southern District of New York, isn’t finished yet. Ishan Wahi, Nikhil’s brother who’s been accused of sharing information from Coinbase Asset Listing posts at least a day before they went up, has pled not guilty, according to Bloomberg. Another person was also charged in the case but hasn’t been arrested.
The alleged scheme fell apart partially thanks to a tweet; one Twitter user noted, “ETH address that bought hundreds of thousands of dollars of tokens exclusively featured in the Coinbase Asset Listing post about 24 hours before it was published.” The post apparently caught the company’s attention, as its chief security officer responded to say it was looking into the matter. The next month, Ishan Wahi was apprehended while trying to board a flight to India.
As for Nikhil Wahi, he could face deportation to India after serving his sentence, according to Bloomberg. His lawyer reportedly told the court that he made the trades not to get rich, but so he could help his parents retire and pay them back for sending him to college.
When the charges were announced by the Department of Justice, US Attorney Damian Williams called it the “first ever insider trading case involving cryptocurrency markets.” It’s not the only case in the crypto space, though. Williams himself is also dealing with an insider trading case involving the NFT trading platform OpenSea.