U.S. Securities and Exchange Commission announced that insider trading was being investigated against Coinbase’s former manager. The man has since been detained and faces criminal charges. According to the regulator, there are nine securities identified in this complaint. U.S. Attorney Damian Williams says it is “the first-ever insider trading case involving cryptocurrency markets.”
SEC Charges Former Coinbase Manager, His Brother, and a Friend — 9 Crypto Tokens Identified as Securities
The U.S. Securities and Exchange Commission (SEC) announced Thursday “insider trading charges against a former Coinbase product manager, his brother, and his friend.”
The SEC detailed: “While employed at Coinbase, Ishan Wahi helped to coordinate the platform’s public listing announcements that included what crypto assets or tokens would be made available for trading.” The regulator added that from at least June 2021 to April 2022:
Ishan violated his duty by repeatedly tipping the timing and contents of forthcoming listing announcements his brother Nikhil Wahi (and his friend Sameer Ramani)
“Nikhil Wahi and Ramani allegedly purchased at least 25 crypto assets, at least nine of which were securities, and then typically sold them shortly after the announcements for a profit. The long-running insider trading scheme generated illicit profits totaling more than $1.1 million,” the SEC noted.
The SEC filed nine complaints against crypto asset securities, including AMP and RLY.
The securities watchdog charged Ishan Wahi, Nikhil Wahi, and Ramani with “violating the antifraud provisions of the securities laws.” The regulator is seeking “permanent injunctive relief, disgorgement with prejudgment interest, and civil penalties.”
The Criminal Cases
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York also announced criminal charges against all three individuals Thursday.
According to an announcement posted by the Department of Justice (DOJ), the three are charged “in connection with a scheme to commit insider trading in cryptocurrency assets by using confidential Coinbase information about which crypto assets were scheduled to be listed on Coinbase’s exchanges.”
Nikhil Wahi was and Ishan Wahi were both arrested in Seattle, Washington on Thursday. Sameer Ramani, however, remains in hiding.
U.S. attorney Damian Williams said:
Last month I had announced that I was the first to announce an insider trading case against NFTs. Today, however, I am announcing the first ever insider trading case with cryptocurrency markets.
FBI Assistant Director Michael J. Driscoll said: “The defendants made illegal trades in at least 25 different crypto assets and realized ill-gotten gains totaling approximately $1.5 million.”
All three individuals are charged with “two counts of wire fraud conspiracy and two counts of wire fraud, each of which carries a maximum sentence of 20 years,” the DOJ noted.
The Justice Department has announced that the Justice Department had filed the first insider trading investigation involving non-fungible tokens (NFTs). The defendant allegedly used NFT platform Opensea’s confidential information about what products were going to be featured on its homepage “to secretly purchase dozens of NFTs shortly before they were featured,” the DOJ detailed.
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