Damian Williams, United States Attorney for the Southern District of New York, and Michael J. Driscoll, Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), today announced the unsealing of an indictment charging ISHAN WAHI, an ex product manager at Coinbase Global, Inc. (“Coinbase”), NIKHIL WAHI and SAMEER RAMANI, with conspiracy to commit wire fraud and wire fraud in connection with a scheme to conduct insider trading in cryptocurrency assets using Coinbase’s confidential information about which cryptocurrency assets were scheduled to be listed on Coinbase exchanges. ISHAN WAHI and NIKHIL WAHI were arrested this morning in Seattle, Washington and will appear today in the United States District Court for the Western District of Washington. SAMEER RAMANI was also charged today and is wanted.
US Attorney Damian Williams said: “Today’s charges are a further reminder that Web3 is not a lawless zone. Just last month, I announced the first insider trading case involving NFTs, and today I announce the first ever insider trading case involving cryptocurrency markets. Our message with these allegations is clear: fraud is fraud is fraud, whether it happens on the blockchain or on Wall Street. And the Southern District of New York will continue to be relentless in bringing fraudsters to justice wherever we find them.”
FBI Assistant Director Michael J. Driscoll said: “Although the charges in this case relate to transactions made on a crypto exchange – rather than a more traditional financial market – they still constitute insider trading. Allegedly, the defendants illegally traded in at least 25 different crypto assets and made illegal profits totaling approximately $1.5 million. “Today’s action should demonstrate the FBI’s commitment to protecting the integrity of all financial markets – both ‘old’ and ‘new’.”
As alleged in the indictment unsealed in Manhattan federal court[1]:
Background
At all relevant times, Coinbase was one of the largest cryptocurrency exchanges in the world. Coinbase users can buy, exchange and sell various crypto assets through online user accounts with Coinbase. Periodically, Coinbase added new cryptoassets to those that could be traded through its exchange, and the market value of cryptoassets usually increased significantly after Coinbase announced that it would list a particular cryptoasset. Accordingly, Coinbase kept such information strictly confidential and prohibited its employees from sharing that information with others, including giving a “tip” to any person who might trade based on that information.
Starting around October 2020, ISHAN WAHI worked at Coinbase as a product manager assigned to a Coinbase asset listing team. In that role, ISHAN WAHI was involved in the highly confidential process of listing crypto assets on Coinbase’s exchanges and had detailed and advanced knowledge of which crypto assets Coinbase was planning to list and the timing of public announcements regarding those listings. of crypto assets. Beginning at least August 2021 and continuing through May 2022, ISHAN WAHI was a member of a private Coinbase messaging channel reserved for a small number of Coinbase employees with direct involvement in the Coinbase asset listing process. The private channel was used to discuss, among other things, “exact announcement / launch dates + timelines” that Coinbase did not want to share with all of its employees.
Internal Trade Scheme
On at least 14 occasions beginning at least June 2021 and continuing through April 2022, ISHAN WAHI knew in advance that Coinbase planned to list specific crypto assets and the timing of Coinbase’s public announcements of those asset listings and misappropriated that information confidentially of Coinbase by tipping either his brother, NIKHIL WAHI, or ISHAN WAHI’s friend and associate, SAMEER RAMANI, so that they could make profitable trades in those crypto assets prior to the public announcements of Coinbase’s listing.
After receiving advice from ISHAN WAHI, NIKHIL WAHI and RAMANI used anonymous Ethereum blockchain wallets to buy crypto assets shortly before Coinbase publicly announced that it was listing or considering listing these crypto assets on its exchanges. After Coinbase’s public listing announcements, NIKHIL WAHI and RAMANI sold crypto assets for a profit. Based on confidential information provided by ISHAN WAHI, NIKHIL WAHI and RAMANI collectively traded shortly before at least 14 separate Coinbase public listing announcements related to at least 25 different crypto assets. As a result of the insider trading scheme, NIKHIL WAHI and RAMANI collectively generated realized and unrealized profits totaling at least approximately $1.5 million.
To conceal purchases of crypto assets prior to Coinbase’s listing announcements, NIKHIL WAHI and RAMANI used centralized exchange accounts held in the names of others and transferred funds, crypto assets and proceeds of their scheme through multiple anonymous wallets of the Ethereum blockchain. NIKHIL WAHI and RAMANI also regularly created and used new Ethereum blockchain wallets without any prior transaction history in order to further hide their involvement in the scheme.
ISHAN WAHI’S ATTEMPT TO LEAVE THE UNITED STATES
On April 11, 2022, Coinbase announced that it was considering potentially listing dozens of crypto assets on its exchanges. Based on confidential Coinbase information provided by ISHAN WAHI, RAMANI caused multiple anonymous Ethereum blockchain wallets to purchase large amounts of at least six of the cryptoassets to be included in Coinbase’s April 11, 2022, listing announcement.
Shortly after RAMANI traded ahead of Coinbase’s April 11 listing announcement, on April 12, 2022, a Twitter account that is well-known in the crypto community tweeted about an Ethereum blockchain wallet “that bought hundreds of thousands of dollars worth of tokens featured exclusively on the Coinbase Asset List Post about 24 hours before it went live.” The trading activity referred to in the April 12 tweet was trading caused by RAMANI. Coinbase then responded publicly on Twitter noting that it had already begun investigating the matter, and a few weeks later stated in a public blog post that any Coinbase employee who disclosed confidential company information would be “immediately terminated and to be referred to the relevant authorities (potentially for criminal prosecution)”
On May 11, 2022, Coinbase’s director of security operations emailed ISHAN WAHI to inform him that he should appear for an in-person meeting regarding Coinbase’s asset listing process at Coinbase’s office in Seattle, Washington on Monday , 16 May 2022. ISHAN WAHI confirmed he would attend the meeting.
On Sunday evening, May 15, 2022, ISHAN WAHI purchased a one-way flight to India that was scheduled to depart the following day shortly before ISHAN WAHI was supposed to be interviewed by Coinbase. Before boarding the flight, ISHAN WAHI falsely told Coinbase employees that he had already left for India, when he had not. In the hours between booking the flight and its scheduled departure, ISHAN WAHI called and texted NIKHIL WAHI and RAMANI regarding the Coinbase investigation and sent them both a screenshot of the messages he received on May 11, 2022 , from the director of security operations at Coinbase. . Before boarding the May 16, 2022 flight to India, ISHAN WAHI was detained by law enforcement and prohibited from leaving the country.
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ISHAN WAHI, 32, of Seattle, Washington, is charged with two counts of conspiracy to defraud and two counts of wire fraud, each of which carries a maximum sentence of 20 years.
NIKHIL WAHI, 26, of Seattle, Washington, is charged with one count of wire fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years.
SAMEER RAMANI, 33, of Houston, Texas, is charged with one count of wire fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years.
Maximum statutory sentences are set by Congress and are provided here for informational purposes only, as each defendant’s sentence will be determined by a judge.
Mr. Williams praised the investigative work of the FBI. He also acknowledged the assistance of the Justice Department’s National Cryptocurrency Enforcement Team, as well as that of the Securities and Exchange Commission, which separately launched civil proceedings against the defendants today. Mr. Williams further thanked Coinbase Global, Inc. for cooperation with the investigation.
This case is being handled by the Office’s Securities and Commodity Fraud Task Force. Assistant United States Attorneys Noah Solowiejczyk and Nicolas Roos are leading the prosecution.
The allegations in the indictment are only allegations, and defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase implies, the entirety of the text of the Indictment and the description of the Indictment presented herein constitute allegations only, and each fact described must be treated as an allegation.
