The US Securities and Exchange Commission (SEC) announced on Thursday that it had filed charges against a former Coinbase product manager, his brother and his friend in a cryptocurrency insider trading case.
According to the press release, the defendants are accused of perpetrating a scheme to trade ahead of multiple announcements regarding certain cryptos that would later be made available on Coinbase.
Case Background
According to the SEC’s complaint, Ishan Wahi coordinated Coinbase’s public listing announcements that included which crypto assets or tokens would be listed for trading while employed there. The SEC alleged that Coinbase treated this information as confidential and warned its employees not to trade with it or tip others on it.
However, Wahi repeatedly tipped Nikhil Wahi and Sameer Ramani about upcoming listing announcements between June 2021 and April 2022, in violation of his duties. In advance of those announcements, which usually led to an increase in the assets’ prices, Nikhil Wahi and Ramani allegedly purchased at least 25 crypto assets, of which at least nine were securities, and sold them shortly afterwards. The SEC argued that more than $1.1 million was generated through the insider trading scheme.
“We are not concerned with labels, but rather the economic realities of an offering. In this case, those realities affirm that a number of the crypto assets at issue were securities, and, as alleged, the defendants engaged in typical insider trading ahead of their listing on Coinbase. Rest assured, we’ll continue to ensure a level playing field for investors, regardless of the label placed on the securities involved,” Gurbir S. Grewal, the Director of the SEC’s Division of Enforcement, commented.
In a complaint filed in a federal district court in Seattle, Washington, the SEC is charging Ishan Wahi, Nikhil Wahi and Sameer Ramani with violating the securities laws’ antifraud provisions and is seeking permanent injunctions, disgorgement with prejudgment interest, and civil penalties.
