A former Coinbase COIN -2.77%decrease; red down pointing triangle Global Inc. employee pleaded guilty Tuesday to two counts of conspiracy to commit wire fraud for his role in what prosecutors said was the first cryptocurrency insider-trading case.
Ishan Wahi, 32 years old, told U.S. District Judge Loretta Preska that he had conspired with others to misappropriate valuable confidential information that he gained from his job at Coinbase. His brother, Nikhil Wahi, and an associate then used that information to make trades on digital tokens, he said.
“I’m very sorry for what I did,” Mr. Wahi said in federal court in Manhattan.
Judge Preska set Mr. Wahi’s sentencing for May 10. While Judge Preska will determine the sentence, lawyers for both sides agreed appropriate sentencing guidelines recommended 37 to 46 months in prison.
Damian Williams, the U.S. attorney for the Southern District of New York, said in a written statement that Mr. Wahi was the first insider to admit guilt in an insider-trading case involving the cryptocurrency markets. “Whether it occurs in the equity markets or the crypto markets, stealing confidential business information for your own personal profit or the profit of others is a serious federal crime,” Mr. Williams said.
David Miller, a lawyer for Mr. Wahi, declined to comment.
The misappropriated data related to coming digital tokens Coinbase intended to list.PHOTO: ROBERT NICKELSBERG/GETTY IMAGES
Mr. Wahi worked on Coinbase’s asset-listing team, using his position to tip off his brother to information about coming digital tokens the currency exchange planned to list. Coinbase said last year that it had fired Mr. Wahi.
Prosecutors charged Mr. Wahi, his brother and the associate last summer, saying the three men netted more than $1.5 million in illegal profits. Nikhil Wahi, 27, previously pleaded guilty to one count of conspiring to commit wire fraud and was sentenced in January to 10 months in prison. The friend, Sameer Ramani, remains at large, according to prosecutors.
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Even as Ishan Wahi pleaded guilty, he continues to fight a civil insider-trading lawsuit filed by the Securities and Exchange Commission. The SEC alleged that Mr. Wahi and his brother committed insider trading because at least some of the cryptocurrencies traded were unregistered digital securities, a contention the brothers dispute.
That disagreement wasn’t central to Mr. Wahi’s criminal case, which focused on wire-fraud offenses, but he referenced it during his plea.
“While I do not believe that any of the relevant cryptocurrencies were securities, and relied on statements of Coinbase and others that these cryptocurrencies were not securities, I knew it was wrong to misappropriate and disseminate Coinbase’s property,” Mr. Wahi told Judge Preska.