Ishan Wahi was charged alongside two others with wire fraud conspiracy and wire fraud in connection with a scheme to commit insider trading using confidential information on which digital assets the exchange would list.
The U.S. Justice Department accused Wahi of sharing this information with his brother Nikhil Wahi and Sameer Ramani, a friend. The two made at least 14 trades starting June 2021 with Ethereum wallets, netting over $1.5 million. Authorities said the two used accounts registered under other people’s names to conceal their elaborate scheme.
Wahi and his brother Nikhil were arrested in July. The former was arrested while at the airport, where he was bound to board a flight to India after being spooked by a request to present himself at Coinbase’s Seattle office. Ramani is still at large.
According to a Reuters report this week, Wahi and Nikhil pleaded not guilty to the insider trading charges before U.S. District Judge Loretta Preska.
David Miller, a lawyer representing the two, argued that they couldn’t be charged with insider trading as that only applies to securities or commodities, and digital currencies are neither. He also claimed that with Coinbase testing the tokens before listing them, those with keen eyes were aware of the tokens to be listed beforehand.
Coinbase has remained tight-lipped on the issue. However, it has previously revealed that it conducted an internal probe and shared its findings with the prosecutors.
Bail for the two brothers was set at $1 million, with their next court appearance scheduled for March 2023.
In addition to the wire fraud charges, the three defendants also face civil charges against them by the SEC. The securities regulator said that nine of the 25 tokens they allegedly traded were securities. These charges have received criticism from some in the industry, including fellow watchdog CFTC. Commissioner Caroline Pham described the action by the SEC as “regulation by enforcement.”
— Caroline D. Pham (@CarolineDPham) July 21, 2022
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