On Tuesday, May 30, the former manager of Coinbase and his brother struck a deal with the SEC.
Ishan and Nikhil Wahi were accused of insider trading in cryptocurrency assets while Ishan Wahi was still a product manager at Coinbase.
The case gained attention for being one of the earliest to focus on insider trading in cryptocurrency assets.
The Wahi brothers and the SEC stipulated in the settlement agreement that “at least” nine of the 25 crypto assets they sold as part of their insider trading operation qualified as securities.
As part of the settlement, “the Wahi brothers agreed not to deny the SEC’s allegations,” stated the SEC.
According to the settlement agreement, the brothers “each agreed to be permanently enjoined from violating Section 10(b) of the Securities Exchange Act and Rule 10b-5.”
The SEC has the authority to regulate securities fraud under Rule 10b-5, whereas Section 10b forbids fraud in the purchase or sale of securities.
Ishan Wahi’s attorneys filed a request to dismiss the insider trading charges against him earlier this year, claiming that the SEC was seeking to exploit the case to prove its regulatory authority.
Asserting that it “does not list securities,” Coinbase denied the SEC’s allegations.
Ishan and Nikhil Wahi entered guilty pleas to conspiracy to conduct wire fraud as a consequence of the criminal case against them. Ishan was given a term of 24 months in prison and had to hand over 10.97 ether and 9,440 Tether. Nikhil was given a 10-month jail term and had to hand over $892,500.
This instance demonstrates the SEC’s dedication to maintaining the market’s integrity and promoting ethical trading procedures. Regulators continue to keep a vigilant eye out for unlawful activity that might damage investor trust as the cryptocurrency business evolves quickly.
The U.S. Department of Justice (DOJ) was in charge of the criminal sections of the case while the SEC handled the securities-related aspects.
The SEC and Coinbase are now involved in a legal dispute over the SEC’s alleged refusal to provide the exchange with regulatory clarification.