'Groundbreaking Cryptocurrency Insider Trading Case' Sends Ex-Coinbase Manager's Brother To Jail

The brother of a former Coinbase manager has been sentenced to 10 months imprisonment after pleading guilty in what the U.S. Department of Justice (DOJ) described as a "groundbreaking cryptocurrency insider trading case."

U.S. District Judge Loretta A. Preska sentenced Nikhil Wahi to 10 months in prison "for his participation in a scheme to commit insider trading in cryptocurrency assets by using confidential information from his brother, a former product manager at Coinbase Global, Inc. ('Coinbase')," the DOJ said in a statement Tuesday.

In September 2022, Nikhil admitted to trading based on confidential information from Coinbase, a publicly traded company operating as a crypto exchange platform, and pleaded to a wire fraud conspiracy.

"At a time when the cryptocurrency markets have been plagued by fear, uncertainty and doubt, insider trading creates the impression that everything is rigged and that only people with secret advantages can make a real buck. Today's sentence makes clear that the cryptocurrency markets are not lawless. There are real consequences to illegal insider trading, wherever and whenever it occurs," U.S. Attorney Damian Williams said in the statement.

Insider trading charges were filed against Nikhil, Ishan Wahi and Sameer Ramani by the DOJ and the U.S. Securities and Exchange Commission in July 2022.

According to prosecutors, Ishan, the former product manager at Coinbase, shared confidential information with his brother Nikhil and his friend Ramani about new crypto assets the centralized crypto exchange was planning to list.

Ishan already pled guilty to the allegation, while his friend Ramani is still at large.

Prosecutors reportedly noted that Nikhil made nearly $900,000 in profit by illegally trading 40 different tokens. They recommended a 10- to 16-month sentence.

"On multiple occasions following Coinbase's public listing announcements, Nikhil Wahi sold the crypto assets for a profit," the DOJ said further.

Preska said during the sentencing hearing at the Manhattan federal court that the crime committed was not a case of "isolated error in judgment," Reuters reported.

Nikhil's mother and other family members were present at the sentencing, during which he told the judge he had traded to repay his parents for giving him a U.S. college education.

"I wanted to help my parents, but instead I put them through great suffering," Nikhil said, as per the outlet, adding, "I'm very sorry for what I did."