Brother of Ex-Coinbase Manager Pleads in Crypto Insider Trading Case

The brother of an ex-Coinbase product manager pleaded guilty to wire fraud conspiracy, Reuters wrote.

This, according to U.S. prosecutors, is the first insider trading case involving cryptocurrency. Nikhil Wahi, 26, said he had made trades based on confidential Coinbase information. Prosecutors said the ex-product manager, Ishan Wahi, shared the information with his brother and their friend Sameer Ramani, involving new digital assets Coinbase was going to let users trade.

After that, Nikhil Wahi and Ramani reportedly made use of Ethereum blockchain wallets to buy the assets and trade at least 14 times before Coinbase announcements. The announcements usually caused the assets to rise in value, generating at least $1.5 million in gains.

“I knew that it was wrong to receive Coinbase’s confidential information and make trades based on that confidential information,” Nikhil Wahi told the judge, adding that he knew it meant he would be deported from the U.S.

Ishan Wahi has pleaded not guilty – he’ll appear in court as of March 22. Meanwhile, Ramani is still at large.

Fraud involving crypto has been widespread, especially in the wake of the pandemic in which much of society had to migrate to digital ways of doing business.

Read more: Scammers Use ‘Age-Old Hacking’ to Rob Crypto Users

PYMNTS wrote that scammers have been using fake crypto websites to steal funds from users.

“A lot of people are making fake versions of real websites and directing users to those pages so they can take their money,” Erin Plante, senior director of investigations at the blockchain data platform Chainalysis Inc., told Bloomberg News Thursday (Sept. 8). “A lot of this is age-old hacking.”

Sham websites have been reportedly disguising themselves as pages for various popular sites including Coinbase. The idea is to trick users into giving up information letting hackers access their crypto wallets. Scammers use search engine optimization methods to promote the sites, which use URL addresses resembling real sites to catapult the fake pages to the top of Google’s search results.