By Luc Cohen
NEW YORK (Reuters) – The brother of a former Coinbase Global Inc product manager was sentenced on Tuesday to 10 months in prison after pleading guilty in September to a wire fraud conspiracy charge, in what U.S. prosecutors have called the first insider trading case involving cryptocurrency.
Nikhil Wahi admitted last year that he made trades based on confidential Coinbase information. Federal prosecutors in Manhattan say Ishan Wahi, the former product manager, shared confidential information with his brother and their friend Sameer Ramani about new digital assets Coinbase was planning to let users trade.
Ishan Wahi has pleaded not guilty. Ramani, who was also charged, is at large.
U.S. District Judge Loretta Preska handed down the sentence.
The sentencing comes as U.S. prosecutors and regulators ramp up their scrutiny of cryptocurrency companies and executives. Last month, FTX founder Sam Bankman-Fried was charged with eight counts of fraud and conspiracy over the collapse of the now-bankrupt exchange, a Coinbase rival.
Bankman-Fried has pleaded not guilty. Two of his closest associates, Caroline Ellison and Gary Wang, have pleaded guilty and agreed to cooperate with prosecutors.
The crypto sector is also struggling, after a plunge last year in the value of bitcoin and other digital assets due to rising interest rates and worries of an economic downturn.
Earlier on Tuesday, Coinbase – one of the world’s largest cryptocurrency exchanges – said it would cut 950 employees – about 20% of its workforce – in a third round of layoffs since last year.
Prosecutors had recommended Nikhil Wahi be sentenced to between 10 and 16 months in prison, arguing that he earned nearly $900,000 in profits from the scheme. His defense lawyers had proposed he be spared prison time, arguing he was motivated by his desire to repay his parents for funding his college education and that he had never been arrested before.
(Reporting by Luc Cohen in New York; Editing by Lisa Shumaker)