Wahi Brothers Settle With SEC Over Coinbase Insider Trading Charges

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Former Coinbase product manager Ishan Wahi and his brother Nikhil Wahi have agreed to a settlement with the United States Securities and Exchange Commission (SEC) over the case of Insider Trading.

The SEC announced the decision on Tuesday, May 30th, 2023, stating that the Wahi brothers agreed to be “permanently enjoined from violating Section 10(b) of the Securities Exchange Act and Rule 10b-5.”

In effect, they would be expected to pay disgorgement of ill-gotten gains and prejudgment interest. This is in addition to the forfeiture of 10.97 Ethereum (ETH) and 9,440 Tether (USDT) by Ishan, and another $892,500 by Nikhil. At the same time, Ishan has agreed to work with the agency in any investigation regarding the case. 

First Crypto Insider Trading Happens at Coinbase

Ishan, Nikhil, and one more person identified as Sameer Ramani came under the radar of the U.S. authorities in July 2022 after the Department of Justice announced charges against them.

They were charged by both Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation for conspiracy to commit wire fraud based on insider trading offences.

Specifically, the charges against him stated that Ishan leveraged his position in Coinbase at the time to gain first-hand knowledge of tokens that the exchange planned to list in the near future. Equipped with this information, Ishan together with the other two persons traded about 14 of those known 25 cryptocurrencies and raked in more than $1.5 million in profit.

Guilty or Not Guilty?

At first, the former Coinbase product manager pleaded not guilty to the charges levied against him in a Manhattan federal court. However, his 26-year-old brother Nikhil pleaded guilty in the weeks following Ishan’s plea. It is worth noting that Nikhill’s plea was the first-ever guilty plea to crypto wire fraud as the case was also the first insider trading case involving cryptocurrency.

SEC Classifies Insider Trading Tokens as Securities

Meanwhile, the SEC claimed that 9 out of those 25 cryptocurrencies were securities but Coinbase stepped into action to refute the regulator’s bold claim. Paul Grewal, Coinbase’s Chief Legal Officer published a blog post titled “Coinbase does not list securities. End of story” to address the classification.

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