Former Coinbase Manager Settles Charges With SEC In Insider Trading Case

Key Points:

• The SEC announced that former Coinbase product manager Ishan Wahi and his brother had agreed to settle allegations of insider trading.
• Wahi received a two-year jail term earlier this month after pleading guilty to similar criminal counts.
• In Wahi’s insider trading case, Coinbase has not been accused of any misconduct.

The United States Securities and Exchange Commission (SEC) stated on May 30 that former Coinbase product manager Ishan Wahi and his brother Nikhil Wahi had agreed to resolve accusations of insider trading filed against them. The Securities and Exchange Commission has filed a motion for final judgment in the United States District Court for the Western District of Washington.

The brothers were detained last year on suspicion of wire fraud conspiracy and wire fraud in connection with an insider trading scam. The SEC filed insider trading accusations on the same day. According to the SEC’s release on Tuesday, the two agreed to disgorge their earnings and pay interest.

They pled guilty to the allegations brought by the Department of Justice, and Ishan Wahi now faces a 2-year term, while Nikhil Wahi is serving a 10-month sentence. The SEC said that the brothers’ criminal fines satisfied the civil case settlements and that it would not pursue any further penalties.

Wahi’s SEC cooperation agreement covers his own case as well as any relevant judicial or administrative process or inquiry started by the Commission or to which the Commission is a party, implying that he may participate in the separate probe.

SEC Director of Enforcement Gurbir Grewal said in a statement that the suspected conduct is not new.

“We allege that Ishan and Nikhil Wahi, respectively, tipped and traded securities based on material nonpublic information, and that’s insider trading, pure and simple. The federal securities laws do not exempt crypto asset securities from the prohibition against insider trading, nor does the SEC. I am grateful to the SEC staff for successfully working to resolve this matter,” he said.

The SEC alleged in its initial complaint against Wahi last year that the tokens at the center of the insider trading allegations were unregistered securities, which means the SEC could try to hold Coinbase liable for facilitating the sale of unregistered security investments for the tokens that the company eventually listed.

The settlement ended the court action that was supposed to determine whether nine of the cryptocurrencies at the core of the dispute were, in fact, securities, as the SEC alleged. Ishan Wahi contended in his first answer to the SEC complaint that the tokens were not securities.

Coinbase postponed any SEC action last month by suing the agency for a response to a petition for crypto-specific regulations. The case is being fought by the SEC.

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Harold

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