Former product manager at Coinbase Isan Wahi has pleaded guilty to two counts of conspiracy to commit wire fraud in a case that has been labelled as the first insider trading case involving cryptocurrencies.
Wahi had worked on Coinbase‘s asset-listing team and had advance knowledge of the timings and public announcements of assets the exchange planned to list. He also had access to a private messaging channel used to discuss launch dates and timelines.
In July, Wahi was accused of tipping off his brother Nikhil Wahi and friend Sameer Ramani with confidential information, leading to profits of US$1.5 million.
Read more: Coinbase Shows Insider Trading is Too Tempting in Crypto’s Wild West
“I knew that Sameer Ramani and Nikhil Wahi would use that information to make trading decisions,” Ishan Wahi admitted during a court hearing on Feb 7.
“It was wrong to misappropriate and disseminate Coinbase’s property,” he added.
Ishan Whai’s lawyers previously argued that he “is innocent of all wrongdoing and intends to defend himself vigorously against these charges and in the SEC action.”
Meanwhile, Coinbase CEO Brian Armstrong said that the company has heard "rumors" that the US Securities Exchange Commission (SEC) intends to ban crypto staking for retail users in the US.
In a twitter thread on Wednesday, Armstrong maintained that staking is "not a security", and that it allows investors to "participate directly in running open crypto markets".
"Regulation by enforcement doesn't work. It encourages companies to operate offshore, which is what happend with FTX," Armstrong added.
Not the first in crypto
While the case against Wahi might be insider trading incident involving a crypto exchange, the practice is actually prevalent in other areas of crypto, particularly within the NFT industry.
Last year, former OpenSea product manager Nathan Chastain was charged with insider trading in NFTs. It was revealed that Chastain secretly purchased NFTs just before OpenSea featured the piece on its front page, and then sold it at a much higher price once it went live.
In June, Singapore-based NFT project The Other Side (TOS) was outed for insider trading, with at least two members within the team having admitted to fraudulent mishandling of the project’s community treasury.
Read more: Insider Trading Uncovered at Singapore NFT Project The Other Side