The U.S. Securities and Exchange Commission (SEC) has settled with a former Coinbase product manager and his brother for insider trading. announced Tuesday.
Former Coinbase employee Ishan Wahi and brother Nikhil Wahi were working on “a plan to act ahead of multiple announcements regarding at least nine crypto asset securities to be made available for trading on the Coinbase platform said the SEC.
The two brothers were originally charged after the agency filed a complaint on July 21, 2022.
The filing stated that Coinbase treated that information as confidential and warned employees not to trade or tip others off with the information of tokens that would be listed on its platform. From June 2021 to April 2022, Ishan Nikhil and his friend, Sameer Ramani, repeatedly “tipped the timing and content of upcoming ad announcements”.
Both Nikhil and Ramani reportedly bought at least 25 crypto assets, nine of which — AMP, RLY, DDX, XYO, RGT, LCX, POWR, DFX, and KROM — were securities, and sold them shortly after for a profit of about $1 ,1 million. according to an SEC submit from July 2022.
“While the technologies at issue in this case may be new, the behavior is not,” Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in a statement. “Federal securities laws do not exempt crypto-asset securities from the prohibition of insider trading, and neither does the SEC.”
The two brothers agreed to spend their “ill-gotten” profits and pay interest. In addition, they plead guilty to the Justice Ministry charges of conspiracy to commit telegram fraud, with Ishan facing a two-year prison sentence and Nikhil serving a 10-month prison sentence. Ishan also has to hand over 10.97 ether, about $20,900, and 9,440 of the stablecoin USDT. Nikhil must forfeit $892,500.
The SEC said it is not seeking other punishments in response to the Wahi brothers’ jail sentences. Ramani is still at large and although he is a US citizen, he is said to be in India, according to the SEC.
The settlement answers the question of whether or not the nine cryptocurrencies were securities that Ishan originally owned protested in February. This case may provide clarity for future matters related to cryptocurrencies and a legal framework for those involved in the market.
In the past, SEC Chairman Gary Gensler has stated that almost all cryptocurrencies are securities, with the exception of Bitcoin. While the SEC’s stance becomes increasingly clear with each announcement, many players in the crypto industry continue to push against that ruling in hopes of getting tailored frameworks for digital assets as opposed to fitting the industry into traditional finance. .