Former Coinbase Manager and Brother Settle Insider Trading Charges

In a landmark case showcasing the SEC’s growing influence over the crypto sphere, two brothers, formerly associated with Coinbase, have agreed to settle insider trading charges.

Ishan Wahi, a former product manager at Coinbase, and his brother Nikhil Wahi were part of an insider trading scandal. The duo allegedly used confidential information to trade ahead of major announcements regarding new crypto asset securities listed on the platform.

Ishan was instrumental in planning the company’s public listing announcements. Those announcements included details about upcoming crypto assets, which were supposed to be kept strictly confidential, according to Coinbase. In fact, employees are warned against using or sharing the details, something Ishan ignored.

In direct violation of the internal policies, Ishan reportedly tipped his brother Nikhil and a friend, Sameer Ramani, about upcoming announcements. He did this from June 2021 to April 2022, capitalizing on the usual price surge. Doing that allowed the trio to allegedly purchase and sell at least 25 crypto assets, at least nine of which were securities, for a substantial profit.

As part of the settlement, the Wahi brothers have agreed to a permanent injunction, which means they’re legally prevented from engaging in any deceptive or manipulative practices when trading any securities—a rule stipulated by Section 10(b) of the Securities Exchange Act.

Additionally, they agreed to return the money they made from their illegal trades, along with any interest earned on that money. However, because they’ve already been ordered by a criminal court to give back the money they made from these trades, the SEC isn’t asking for any extra fines. This is subject to the court’s approval.

In the ensuing criminal proceedings, both brothers pleaded guilty to conspiracy to commit wire fraud, resulting in substantial prison sentences – Ishan received a two-year sentence while Nikhil was sentenced to 10 months.

The SEC’s enforcement director, Gurbir Grewal, underscored that the laws governing securities don’t exclude crypto assets, nor does the SEC offer any exceptions. He emphasized, “While the technologies at issue in this case may be new, the conduct is not.”

The case has caught significant public attention as the SEC expands its regulatory efforts in the crypto industry.