The brother of a former Coinbase product manager has been sentenced to ten months in prison in the first-ever insider trading case involving cryptocurrency markets.
Nikhil Vakhi admitted his involvement in a conspiracy aimed at fraud using electronic means. Crime the convict lies in the fact that he purchased the coins before they appeared on sale on a popular exchange. As a result of fraudulent activities, Nikhil Vakhi made a profit of 900 thousand dollars. The crime was committed with the participation of the convict’s brother Ishan Vakhi.
Nikhil Vakhi was arrested while boarding a flight to India. He had with him three suitcases, seven electronic devices, financial documents, several hundred dollars, two passports, and some other identity documents.
Ishan Vakhi worked as a product manager for the Coinbase asset listing team. From August 2021 to May 2022, he had access to a private messaging channel. These channels were used by the company’s employees who participated in the asset listing. As part of this communication format, information was exchanged about the exact dates of the launch of sales and their time frames. Such information Coinbase is secret. The Company does not make this data publicly available and restricts its distribution to employees.
Prosecutors found that Ishan Vakhi shared confidential information with his brother and friend Samir Ramani. 14 cases of unauthorized transfer of data to third parties have been confirmed. All three used anonymous Ethereum blockchain wallets. This was necessary to purchase cryptocurrencies before the public announcement of the sale of assets or a similar opportunity.
The conspiracy was discovered by a Twitter user. He noticed that the ETH address for which tokens worth several hundred thousand dollars were purchased appeared in the asset listing message about 24 hours before its publication. After that, Coinbase launched an investigation.
Ishan Vakhi stated that he does not consider himself guilty. He is awaiting a court verdict. Samar Ramani is at large. Proceedings against this participant in the criminal conspiracy have not yet begun.