• The SEC recently accused former Coinbase product manager Ishan Wahi and his brother, Nikhil Wahi, of insider trading.
• According to the SEC’s complaint, Ishan allegedly disclosed upcoming listing details to his brother and friend who made illicit trades and profited from at least nine crypto asset securities.
• The SEC emphasized that the federal securities laws do not exempt crypto asset securities from the prohibition against insider trading.
SEC Fines Coinbase’s Former Product Manager for Insider Trading
The Securities and Exchange Commission (SEC) recently accused former Coinbase product manager Ishan Wahi and his brother, Nikhil Wahi, of engaging in a scheme to trade ahead of multiple announcements related to at least nine crypto asset securities. According to the SEC’s complaint filed on July 21, 2022, Ishan allegedly disclosed upcoming listing details to his brother and a friend who then made illicit trades and profited from them.
Ishan & Nikhil Settle Insider Trading Charges with the SEC
Today both brothers agreed to settle charges with the SEC. Between June 2021 and April 2022, Nikhil allegedly took advantage of nonpublic information shared by Ishan about crypto assets that would become available for trading on the platform. Timing their purchases strategically before official announcements, they were able to sell these assets for significant profits following anticipated price surges.
Crypto Market Integrity Upheld
The investigation revealed that despite Coinbase’s policies prohibiting such actions, Ishan had accessed confidential information as a product manager at Coinbase which he shared with his brother who used it for illegal trades. Gurbir S. Grewal, Director of the SEC’s Division of Enforcement stated that “the federal securities laws do not exempt crypto asset securities from the prohibition against insider trading.”
Penalty Imposed on Insiders
As part of their settlement with the SEC, both brothers have agreed to pay more than $500K in disgorgement plus prejudgment interest as well as penalties totaling over $100K each for their alleged violations of U.S federal securities laws. In addition, both have consented to an order permanently enjoining them from future violations including those under Section 10(b) of Securities Exchange Act 1934 and Rule 10b-5 thereunder — all without admitting or denying any wrongdoing on behalf of either party involved in this case.
By taking swift action against these individuals violating U.S regulations concerning insider trading in cryptocurrency markets, the SEC has sent out a strong message upholding market integrity while simultaneously protecting investors’ interests — one which will likely deter similar actions in future cases involving digital assets too