Former Coinbase Manager Settles Insider Trading Charges with SEC

A former Product Manager at Coinbase, Ishan Wahi and his brother Nikhil Wahi, have settled charges of insider dealing brought against them by the US securities regulator. They both agreed to give up illegal profit gained from their scheme and pay prejudgment interest which covers losses on the amount since the case started.

Coinbase Ex-Manager, Brother to Forfeit $900k

The Securities and Exchange Commission (SEC) in a statement said the Wahi brothers have pleaded guilty to conspiracy to commit wire fraud and have been sentenced to 24 months and 10 months in imprisonment, respectively. In addition, the regulator noted that while the former is to forfeit 10.97 ETH and 9,400 USDT (worth about $20K and $9.4K at current market prices), the latter is to give up $892,500. The figures amount to over $900,000.

Furthermore, the securities watchdog said that the brothers agreed to be permanently enjoined from violating the US securities law. The SEC first confronted the brothers and a friend, Sameer Ramani, in court in July last year, claiming that they generated over $1.1 million from the insider trading scheme which involved at least "nine crypto asset securities."

Earlier this month, Finance Magnates reported that Ishan was sentenced to two years imprisonment in a lawsuit initiated by US prosecutors. According to the Department of Justice (DOJ), Ishan pleaded to two counts of wire fraud in February.

Meanwhile, the SEC said if the forfeiture from the criminal case is approved by the court, it will not seek penalties in its civil case.

“As is often the case when a criminal court has already ordered defendants to forfeit their ill-gotten gains, the disgorgement and prejudgment interest in the SEC’s case would be deemed satisfied by the orders of forfeiture of the Wahi brothers’ assets in the criminal action, if approved by the court, and the SEC determined not to seek civil penalties in light of the Wahi brothers’ prison sentences,” the SEC explained in the new statement.

The Insider Dealing Case

According to the SEC, between June 2021 and April 2020, Ishan abused his role as a Product Manager at Coinbase by sharing confidential information about Coinbase’s upcoming listing with his brother and friend Ramani in breach of the crypto exchange’s policy. The two traded with the information and bought at least 25 cryptocurrencies ahead of the listing only to dump them shortly after the tokens were listed, thereby making a profit from the price surge.

Meanwhile, in a previous statement, the DOJ noted that Ishan tried to flee to India after Coinbase initiated an investigation into the case. However, he was arrested in May last year while attempting to do so.

“The federal securities laws do not exempt crypto asset securities from the prohibition against insider trading, nor does the SEC,” noted Gurbir Grewal, the Director of the SEC’s Division of Enforcement.

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