Ishan Wahi, a former Product Manager at Coinbase, has been sentenced to two years imprisonment in a case US prosecutors called the country's first-ever cryptocurrency insider trading case. Thirty-two-year-old Ishan Wahi from Washington received the jail term for tipping off his brother and friend on multiple occasions with confidential information about Coinbase’s upcoming token listings.

With the information, Wahi’s brother, Nikhil Wahi, and friend, Sameer Ramani made over $1.1 million from trading ahead of Coinbase’s public announcements, according to the US securities regulator which filed charges against the three individuals in July last year. The US Department of Justice (DOJ) charged the individuals in the same month with conspiracy to commit wire fraud.

Coinbase's Former Employee Pleads Guilty

The DOJ announced Ishan Wahi's fate on Tuesday, noting that he was sentenced by US District Judge Loretta Preska. However, prosecutors did not comment on the fate of Nikhil Wahi and Sameer Ramani.

The sentence comes over three months after Ishan Wahi pleaded guilty to two counts of conspiracy to commit wire fraud. The confession contradicts the former Coinbase staffer's claim in 2022 that he was not guilty of any wrongdoing.

“Today’s sentence should send a strong signal to all participants in the cryptocurrency markets that the laws decidedly do apply to them,” said Damian Williams, the US Attorney for the Southern District of New York.

"[The district] will hold those who engage in insider trading to full account, regardless of whether their illegal conduct occurs in the equity markets or in the market for crypto assets," added Williams.

Wahi Arrested While Trying to Flee to India

According to prosecutors, Coinbase, the largest crypto exchange in the United States, required its employees to keep secret confidential information about its planned new crypto asset listings. However, Ishan Wahi, who started working at Coinbase with the asset listing team in 2020, breached “his duties of trust and confidence,” prosecutors said.

In addition, prosecutors noted that Coinbase started investigating the case on April 12, 2022, after a Twitter account popular within the crypto circle tweeted about an Ethereum blockchain wallet “that bought hundreds of thousands of dollars of tokens exclusively featured in the Coinbase Asset Listing post about 24 hours before it was published.”

An update on our asset listing processes.

We review assets as thoroughly and quickly as possible, listing everything we can safely and legally list.

There's always more we can do to improve our asset listing process. Read more here: https://t.co/pEAeHk9JGr

👇🧵...

— Coinbase 🛡️ (@coinbase) April 28, 2022

Prosecutors noted that allegations in the indictment and statements made during court proceedings put forward that the tweet referred to trading previously done by Ranami based on a tip off from Ishan Wahi.

The DOJ’s statement further noted that Coinbase during the course of its investigation invited Wahi for ‘an in-person meeting’ related to its asset listing process. However, rather than show up for the meeting, Wahi booked a one-way flight to India and was due to take off hours before he was to appear at the meeting venue on May 16, 2022.

“In the hours between booking the flight and his scheduled departure, Wahi called and texted Nikhil Wahi and Ramani about Coinbase’s investigation and sent both of them a photograph of the messages he had received on May 11, 2022, from Coinbase’s Director of Security Operations,” the DOJ explained in the statement.

Wahi was arrested on the same day (May 16) before he could board the flight to India. In addition to the sentencing, the ex-Coinbase employee was ordered to forfeit various crypto assets he received in connection with the insider trading plot.

LSEG taps OpenFin; new eToro portfolio; read today's news nuggets.