Brother of ex-Seattle Coinbase employee convicted in crypto insider trading case

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The brother of a Seattle-based former Coinbase Global product manager was sentenced to 10 months behind bars for his role in a scheme to exchange inside information about when the cryptocurrency exchange was going to list new tokens.

Nikhil Wahi pleaded guilty in September to one count of conspiracy to commit wire fraud in what Manhattan U.S. attorney Damian Williams called “the first-ever insider trading case involving cryptocurrency markets”. Prosecutors claim his brother’s advice allowed Wahi to trade nearly $900,000 with 40 different crypto tokens.

“I made a huge mistake, a terrible mistake,” Wahi told U.S. District Judge Loretta Preska on Tuesday. “It’s something I will have to live with forever.”

In addition to the jail sentence, Preska ordered Wahi to forfeit $892,500 he had earned from trades. He was also sentenced to two years probation.

Prosecutors had asked Preska to sentence Wahi to 16 months in prison. Wahi, who is being deported to India after serving his sentence, did not expect a prison sentence.

Wahi and his brother, Seattle-based former Coinbase employee Ishan Wahi, were both arrested in July. Ishan Wahi pleaded not guilty. Sameer Ramani, a friend of Ishan Wahi, was also charged. He was not being held in the United States and made no appearance in the case.

Defense attorney Priya Chaudhry told the judge Wahi was not motivated by greed, but by a desire to repay his Indian parents for his American college education and help them have a more comfortable retirement.

Chaudhry called his client “an incredibly decent young man who did the wrong thing for the wrong reason.”

A group of Wahi’s relatives attended the sentencing hearing, including her mother, who had traveled from India.

Coinbase, the largest US trading platform for digital currencies, allows users to buy and sell over 150 tokens, which can often see a flurry of interest immediately upon inclusion on the exchange. Prosecutors claim that between July 2021 and May 2022, Nikhil Wahi used anonymous Ethereum wallets to take advantage of his brother’s advice and purchase cryptocurrencies before Coinbase announced they were to be listed on an exchange.

The case is US v Wahi, 22-cr-392, US District Court, Southern District of New York (Manhattan).

This story originally appeared on bloomberg.com. Read it here.

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