A former Coinbase Global Inc product manager pleaded guilty on Tuesday in what U.S. prosecutors have called the first insider trading case involving cryptocurrency, his defense 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. U.S. 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.