Cryptocurrency exchange Coinbase has quietly scrubbed its blog of any mention of an employee who was charged with insider trading on Thursday.
On March 7, Coinbase published a blog post entitled “Improved clarity and guardrails for new assets on Coinbase.” The post was signed by Ishan Wahi, a former product manager on a team that listed assets on the exchange and who was arrested this week by federal authorities for allegedly providing insider information to his brother, Nikhil Wahi, and a friend, Sameer Ramani, that resulted in nearly $1.5 million in illicit profit, according to the Justice Department.
“Our goal is to be as transparent as possible with our customers regarding trading risks, so we are introducing a new experimental label on asset pages and a disclosure when executing trades for some assets,” said the blog post that was formerly signed by Wahi.
The blog post still included Wahi’s name as of June 8, according to an archived version of it on the Wayback Machine, which archives past versions of websites. But beyond that, it’s unclear when his name was removed.
Asked about the removal of Wahi’s name, a Coinbase spokesperson directed Coins2Day to a separate company blog post updated on Thursday that explained the company’s actions regarding the Wahi case.
“We work hard to ensure all market participants have access to the same information, not only to protect our company but to protect our customers. We are committed to doing our part to ensure all traders are operating on an even playing field, which is critical to furthering Coinbase’s mission of promoting economic freedom,” read the post credited to Coinbase CEO Brian Armstrong.
In a series of tweets on Thursday, Armstrong said that the crypto exchange actively monitors and investigates illegal activity. He said the company received information in April about Wahi and the other two people charged this week and reported information to law enforcement about the alleged “frontrunning,” or using prior knowledge of an event to profit.
“This is a great reminder for everyone in crypto, and at Coinbase, that frontrunning is illegal and erodes trust,” Armstrong tweeted. “We will investigate and refer bad actors to law enforcement, and they will face real legal consequences including serving prison time.”
In a joint statement sent to Coins2Day, Wahi’s lawyers, Andrew St. Laurent, of law firm Harris St. Laurent & Wechsler, and Marc Axelbaum, of Pillsbury Winthrop Shaw Pittman said Wahi would fight the charges against him.
“Ishan Wahi is innocent of all wrongdoing and intends to defend himself vigorously against these charges and in the SEC action. The allegations against him are without merit,” the statement said.
Some people in the crypto community, including the pseudonymous crypto personality Cobie, were skeptical of Coinbase’s response about aggressively monitoring its service for illegal activity. Cobie, who was the first to publicly draw attention to the alleged illegal activity in a tweet on April 12, said that before tweeting about the suspicious activity that led to Wahi’s arrest, he had been tweeting for months about how “frontrunning” had become a big problem on Coinbase.
“Coinbase ‘frontrunning’ was widely known and acknowledged within CT [crypto Twitter],” he tweeted on Thursday. “Now, Coinbase plays ‘hero’ catching the ~evil fraud~!” He wrote.
Cobie also criticized Coinbase for, in his words, only acting on the alleged fraud after he had tweeted about the issue in April.
“The frontrunning lasting for over a year, surely Coinbase should have found this before randoms on twitter did,” he wrote in a tweet on Thursday.
The three men allegedly involved in the insider trading were criminally charged with wire fraud and conspiracy to commit wire fraud. The Wahi brothers were arrested in Seattle on Thursday; Ramani remains at large.
In a reply to Cobie’s tweet on April 13, Coinbase chief security officer Philip Martin said he was investigating the suspicious activity. Weeks later, the company asked Wahi to attend an in-person meeting on May 16, but he bought a one-way ticket for a flight to India on May 15 that was scheduled to depart on the day of the meeting, according to the Justice Department. Wahi was stopped by law enforcement before he could board the flight, the Justice Department said.
The alleged insider trading is the first instance in which federal authorities have brought insider trading-related charges involving cryptocurrency. Last month, the Justice Department arrested Nate Chastain, a former product manager at NFT exchange OpenSea on charges of wire fraud and money laundering in what was billed as the first “insider trading” case brought against a participant in the NFT industry.
Experts say the increase in charges signal an impending crackdown for the crypto and NFT industries, which has largely avoided wide-scale criminal investigations, despite a barrage of claims by investors that scams and bad actors plague the space.
In the press release announcing the charges, U.S. Attorney Damian Williams, who was also involved in the NFT wire fraud case last month, said participants in Web3 industries are not exempt from criminal enforcement.
“Our message with these charges is clear: fraud is fraud is fraud, whether it occurs on the blockchain or on Wall Street. And the Southern District of New York will continue to be relentless in bringing fraudsters to justice, wherever we may find them,” Williams said in the press release.
Also on Thursday, the Securities and Exchange commission brought a civil case against Wahi and his associates which claims that nine cryptocurrencies, including seven listed on Coinbase, are unregistered securities.
Coinbase has disputed the SEC’s claims and called them “an unfortunate distraction from today’s appropriate law enforcement action.”
Correction July 25, 2022: A previous version of this article misstated who the SEC brought a civil case against.
