Nikhil Wahi, brother of former Coinbase product manager Ishan Wahi, pleaded guilty in a Monday hearing to one count of conspiracy to commit wire fraud in connection with an alleged insider trading scheme.

“Less than two months after he was charged, Nikhil Wahi admitted in court today that he traded in crypto assets based on Coinbase’s confidential business information to which he was not entitled,” said Damien Williams of the U.S. Attorney's Office in New York in a statement.

“For the first time ever, a defendant has admitted his guilt in an insider trading case involving the cryptocurrency markets," Williams continued. "Today’s guilty plea should serve as a reminder to those who participate in the cryptocurrency markets that the Southern District of New York will continue to steadfastly police frauds of all stripes and will adapt as technology evolves.”

Nikhil now awaits sentencing in December, which could mean up to 20 years in prison. He has also been ordered to give back the money earned as a result of the illicit Coinbase trading, Williams said.

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Back in July, the Justice Department charged Ishan, Nikhil, and their friend Sameer Ramani with wire fraud conspiracy and wire fraud as it relates to cryptocurrency insider trading. The Securities and Exchange Commission also filed charges against the trio.

While he was working at Coinbase, Ishan allegedly shared his insider knowledge of upcoming Coinbase listing announcements with Nikhil and Sameer to then profit from the listings by purchasing the tokens before they went live on Coinbase. 

In August, Ishan pled not guilty to the DOJ’s charges. Now that his brother has pleaded guilty, it’s unclear how Ishan’s case will proceed and whether he will continue to fight the insider trading case. 

According to the DOJ's statement released Monday, Nikhil implicated his brother Ishan and admitted to receiving tips from him. Nikhil then reportedly used numerous different crypto wallets in others' names to anonymize his insider trading.

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Concerns of insider trading at cryptocurrency exchanges extend beyond just this case, which is considered the first of its kind and is likely to set a precedent. Three Australian finance academics have posited that up to 25% of Coinbase listings in the past four years may have involved some insider trading.

In an August report on Coinbase listings titled “Insider Trading in Cryptocurrency Markets,” the academics alleged that Coinbase has a serious insider trading problem and argued that insider trading is “systemic” in the crypto industry. 

“From visual inspection, we note that there is an evident run-up pattern prior to the listing announcement starting at -250 hours,” the researchers state. “The run-up continues until the listing announcement event, where we see a jump in price because of new information entering the market and traders reacting to the news.

"The run-up pattern we observe is consistent with the run-ups in prosecuted cases of insider trading in stock markets,” they concluded.

A Coinbase representative previously told Decrypt that Coinbase has “zero-tolerance for illicit behavior and monitor[s] for it, conducting investigations where appropriate.”

“We work hard to ensure all market participants have access to the same information,” the company said. “As part of this effort, we take steps to minimize the possibility of technical signals during asset testing and integration steps.”

Editor's note: this article's headline was updated to reflect Nikhil Wahi's position within the company.

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