Securities regulators have settled with a former Coinbase manager accused of insider trading.
The Securities and Exchange Commission (SEC) announced in a Tuesday (May 30) press release that Ishan Wahi, a one-time product manager at the cryptocurrency company, and his brother, Nikhil, agreed to settle civil charges in what prosecutors have said is the first insider trading case involving cryptocurrencies.
“While the technologies at issue in this case may be new, the conduct is not,” Gurbir Grewal, the SEC’s enforcement director, said in the release. “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.”
The Wahi brothers were charged last year after investigators discovered Ishan Wahi had information about new digital assets that Coinbase was going to introduce with his brother and their friend, Sameer Ramani.
Both brothers have already pleaded guilty to criminal offenses, with Ishan Wahi sentenced to 24 months in prison and Nikhil Wahi sentenced to 10 months. Ramani is reportedly still at large.
Before Ishan Wahi settled the suit, some experts in the crypto sector were hoping it could help determine the future of their industry as it relates to regulatory matters.
A motion to dismiss the lawsuit argued the SEC had no standing because Coinbase’s assets aren’t securities. After all, Wahi’s lawyers said, their client was charged with conspiracy to commit wire fraud, not securities fraud.
The hope in the industry was that federal judges who review suits such as these would rule that crypto is different from the stocks and bonds governed by Wall Street regulations.
The case comes during a busy time for crypto enforcement at the SEC. The agency brought a total of 30 cryptocurrency-related enforcement actions last year, a 50% increase from 2021.
In the first months of this year, the SEC handed out 13 enforcement actions, putting it on pace for an increase of more than 25% compared to 2022’s numbers.
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