Three Charged In First Ever Cryptocurrency Insider Trading Tipping Scheme

On the 21st of July, 2022, Darmian William, a US attorney, charged three sets of individuals for the first ever crypto insider trading tipping scheme.

The US Attorney's Office for the Southern District of New York and the Security and Exchange Commission filed separate charges against the three individuals.

They are Ishan Wahi, a former product manager at Coinbase, his brother Nikhil Wahi and their friend, Sameer Ramani.

Nikhil and Ishan Wahi, 26 and 32 years, respectively, reside in Seattle, while Sameer Ramani, of 33 years, resides in Houston.

It was believed that while Ishan Wahi was working at Coinbase, he belonged to the crypto listing team and had access to confidential information.

This information was at his disposal that he tipped his brothers and friends to acquire the soon-to-be listed crypto assets in large quantities.

Immediately after Coinbase listed them publicly, Nikhil Wahi and Sameer Ramani sold their acquired assets and made a profit of about $1.5 million.

Ishan Wahi, a former employee at Coinbase and the leader of the criminal act, was charged with double counts offense of wire fraud and a separate double count conspiracy of wire fraud with a maximum sentence of 20 years.

Nikhil Wahi and Ramani Sameer are considered accomplices and were charged with one count charge of wire fraud and another charge of wire fraud conspiracy.

Keywords: Sameer Ramani, Ishan Wahi, Nikhil Wahi, crypto, insider trading, coinbase, sentence, United states, attorney

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There is always a first to something; some people will be the first to engage in every activity or occurrence.

On the 21st of July, 2022, Darmian William, a US attorney, charged some set of individuals for the first ever crypto insider trading tipping scheme.

Being the first of its kind, the criminal act was followed by a legal tussle that proved that the three guys involved were guilty. In this article, we shall highlight how these individuals were able to carry out the first ever crypto insider trading and the details of their conviction.

Let's begin!

The First-ever Crypto Insider Trading Scheme

Image: IQ Stock Market

The United States Attorney’s Office for the Southern District of New York and the Securities and Exchange Commission alleged that three individuals planned to use confidential Coinbase information on scheduled crypto assets listed on Coinbase’s exchanges later.

Damian Williams, a United States Attorney, charged the three individuals: Ishan Wahi, a former product manager at Coinbase, his sibling, Nikhil Wahi, and their friend, Sameer Ramani. The three individuals were charged with conspiracy and wire fraud concerning a scheme to commit insider trading in crypto assets.

Ishan Wahi and his brother Nikhil Wahi 32 and 26 years, respectively, are citizens of India residing in Seattle. Sameer Ramani, their friend, is an Indian-American and 33 years old, and he resides in Houston.

On the 21st of July, Damian Williams, the United States Attorney for the Southern District of New York announced the unsealing of the indictment charge against the Wahi brothers and Sameer Ramani.

Similarly, the Securities and Exchange Commission (SEC) announced an insider trading charge against the three men. While Ishan and Nikhil Wahi were apprehended in Seattle, Ramani could not be arrested. It is, however, believed that Ramani is currently in India.

According to the prosecutor, the three men conducted the first ever cryptocurrency insider trading tipping scheme. The defendants conducted illegal trades in at least 25 different crypto assets in this criminal act and realized a $1.5 million gain.

Ishan Wahi, who is believed to have led the trading tipping scheme and a former product manager at Coinbase, was charged with double counts of wire fraud conspiracy and a separate double count of wire fraud. The maximum sentence for each offense is 20 years.

On the other hand, Nikhil Wahi and Ramani Sameer, believed to be accomplices, were charged with one count of wire fraud conspiracy and one count of wire fraud. Each of the count charges carries a maximum of 20 years jail term.

How The First Ever Cryptocurrency Insider Trading Tipping Occurred

Image: The Deep Dive

Ishan Wahi took the product manager role at coinbase and was assigned to the asset listing team in October 2020. In that capacity, Ishan Wahi had access to confidential processes and details of listing crypto assets on Coinbase exchanges.

He later became a member of a Coinbase private channel for discussing every detail of the crypto assets listed on Coinbase. These details proved that Ihsan Wahi knew everything about Coinbase's scheduled listing scheme.

To kickstart the first ever crypto insider trading, Ishan Wahi tipped his brother and the third defendant, Nikhil Wahi and Sameer Ramani, about confidential information.

So before Coinbase publicly announced that it was listing those assets, the three men had used anonymous Ethereum blockchain wallets to acquire those exact crypto assets that Coinbase eventually listed.

Shortly after Coinbase listed these assets, Nikil Wahi and Ramani Sameer sold over 6 different crypto assets and realized about $1.5 million in profit. To conceal their purchases of these crypto assets before Coinbase announced their public listing, Nikil Wahi and Sameer Ramani used centralized exchange accounts.

These accounts were opened in the name of other individuals and transferred the proceeds of their fraudulent scheme from several of these accounts to multiple anonymous Ethereum blockchain wallets.

It would be recalled that Ramani and his accomplice traded the acquired crypto assets before April 11, when Coinbase publicly announced the listing.

Coincidentally, on the 12th of April, a Twitter account tweeted that an Ethereum blockchain wallet had “bought hundreds of thousands of dollars of tokens exclusively featured in the Coinbase Asset listing post about 24 hours before it was published”. Coinbase got hold of this Tweet and used its official Twitter handle to reply that it had begun investigating the raised issue publicly.

After an investigation, Coinbase discovered that the trading activity referenced in the tweet was a cryptocurrency insider trading tipping scheme perpetrated by Ishan Wahi, Niki Wahi, and Sameer Ramani.

Shortly after, the Director of Security at Coinbase emailed Ishan Wahi (his former colleague) to appear in person for a meeting, and Ishan Wahi promised to show up. Albeit, Ishan Wahi purchased a flight ticket to India in an attempt to elope, having told his brother and Sameer Ramani that they are under Coinbase’s investigation.

Ishan Wahi was stopped by law enforcement agents and prevented from departing for India while he was already at the airport.

Conclusion

Image: Cryptopolitan

Damian Williams, the US Attorney, said, “Today’s charges are a further reminder that web3 is not a law-free zone…. Our message with these charges is clear; fraud is a fraud, whether it occurs on the blockchain or wall street.”

This statement shows that the US has zero tolerance for criminal and fraudulent activities. No matter how perfect or smooth the criminal act may be, it will be unraveled, and those involved will be brought to justice.

While the Wahi brothers have been brought before the law, Sameer Ramani is still at large and will probably be caught soon.

Author: Valentine. A, Gate.io Researcher

This article represents only the researcher's views and does not constitute any investment suggestions.

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