Market Analysis

Justice Department, SEC File Charges Against Alleged Coinbase Insider Traders


Three men are being charged in the “first ever” crypto insider trading scheme months after being put in the spotlight by a tweet from Cobie.

Key Takeaways

  • Today the Department of Justice charged a former Coinbase employee and two co-conspirators in the “first ever” crypto insider trading scheme.
  • The three men’s alleged scheme was brought to light in April by a tweet from crypto personality Cobie, which prompted an investigation by Coinbase and led to the criminals’ eventual arrest.
  • The trio allegedly generated $1.5 million from their scheme; each individual faces up to 40 years in prison.

A former Coinbase employee and two co-conspirators are being charged by the Justice Department and the SEC in the “first ever” crypto insider trading scheme. Law enforcement claims the scheme was discovered thanks to a tweet from a prominent crypto community member.

Alleged Insider Traders Charged

The Department of Justice (DOJ) announced today that it had charged three people in the “first ever” crypto insider trading scheme. Former Coinbase product manager Ishan Wahi, his brother Nikhil Wahi, and a friend, Sameer Ramani, are being charged with wire fraud conspiracy and wire fraud in connection to a scheme to commit insider trading. 

Within hours, the Securities and Exchange Commission (SEC) also announced charges against the trio for the same alleged scheme. In that case, the SEC “seeks permanent injunctive relief, disgorgement with prejudgment interest, and civil penalties.”

Coinbase is one of the largest crypto exchanges in the world. Due to its popularity, the market value of cryptocurrency projects tends to increase significantly upon listing on the website. According to the DOJ, Ishan Wahi allegedly used his position at Coinbase to inform his co-conspirators of upcoming new cryptocurrency listings so that they could preemptively buy the coins and sell them after listing. 

The DOJ estimates the trio collectively generated roughly $1.5 million in unrealized gains over 14 different listing announcements from at least August 2021 to May 2022. Each individual faces up to 40 years in prison in addition to civil penalties.

The Wahi brothers have both been apprehended, while Ramani remains at large.

Crypto Influencer Influences Law Enforcement

Interestingly, crypto personality Cobie helped the Justice Department make its “first ever” crypto insider trading charges. The DOJ states the scheme may have gone unnoticed until Cobie posted a tweet on April 12 stating that he’d “found an ETH address that bought hundreds of thousands of dollars of tokens exclusively featured in the Coinbase Asset Listing post about 24 hours before it was published.”

Coinbase publicly responded to the discovery; then, on May 11, the company emailed Wahi to schedule an in-person meeting regarding Coinbase’s asset listing process. After that, Wahi attempted to leave the United States for India but was stopped by law enforcement.

Cobie is one of the co-hosts of the popular crypto podcast UpOnly

Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies. 

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