A former Coinbase Global Inc. manager was ordered to spend two years in federal prison for trading on confidential information about when the cryptocurrency exchange was going to list new tokens.
Ishan Wahi was sentenced Tuesday by US District Judge Loretta Preska in Manhattan. Wahi in February pleaded guilty to two counts of conspiracy to commit wire fraud, admitting he passed tips about new offerings to his brother Nikhil and a friend, Sameer Ramani, who used the information to buy cryptocurrencies before Coinbase announced they would be listed. They made about $1.5 million in profits.
Wahi’s prison term is to be followed by two years of supervised release.
The Wahi prosecution was the first involving allegations of cryptocurrency insider trading. He was sentenced less than a week after a former product manager at the NFT marketplace OpenSea was convicted of wire fraud for using confidential information about what tokens would be featured on the site to make thousands of dollars for himself.
Coinbase, the largest US trading platform for digital currencies, allows users to buy and sell more than 150 different tokens, which can often see a rush of interest immediately after they are included on the exchange. Wahi was arrested in May before boarding a one-way flight to India, a day after he had been summoned to Coinbase’s Seattle headquarters for a meeting with the exchange’s director of security operations.
Wahi, a native of India who went to college in Texas and earned a master’s degree at Carnegie Mellon University, had asked the judge to impose a 10-month sentence, the same punishment his brother Nikhil was given, saying his conduct was an “anomaly” that will never happen again.
“This error in judgment has cost him everything: his career, his health, his relationships, his family’s name, and has seriously jeopardized the future of his relationship with his long-term girlfriend,” Wahi’s lawyer, David Miller, wrote in a sentencing memo. “Ishan has squandered years of hard study in school, tireless years of professional development, and forfeited his ability to work in what was a promising and lucrative career.”
Prosecutors sought a sentence of 37 to 46 months behind bars, the same amount called for by federal guidelines, saying that giving him just 10 months would send the wrong message.
“The defendant was not any ordinary Coinbase employee,” the government said in a memo. “As a result of his role as a product manager on one of Coinbase’s asset listing teams, he had routine access to sensitive, confidential business information regarding Coinbase’s planned token listings. This information was valuable and frequently moved crypto token prices.”
Wahi’s brother Nikhil pleaded guilty in September and was sentenced in January. Ramani has not appeared to face charges in the case.
The case is US v Wahi, 22-cr-392, US District Court, Southern District of New York.
