Coinbase insider trading case: SEC announces settlement with the accused

• The SEC announced a settlement with the accused who were convicted in the first-ever crypto trading insider case
• The brothers, who were sentenced to prison, have agreed to pay disgorgement

The United States Securities and Exchanges Commission (SEC) announced that it managed to reach a deal with the Wahi brothers. They were convicted in the first-ever insider trading case

related to cryptocurrencies and were sentenced to prison. In a statement released on 30 May, the commission stated that the brothers have agreed to pay disgorgement and a prejudgement interest.

The brothers in the highlight were identified as Ishan Wahi and Nikhil Wahi. Ishan was working as a product manager

at Coinbase, a leading American-based crypto exchange. And, he was directly involved in announcing the tokens that would be listed on the crypto-exchange.

Ishan was found guilty of leaking the listing information of at least 25 cryptocurrencies to his brother – Nikhil and friend – Sameer Ramani. This information was then used to make a profit of $1.5 million between June 2021 and May 2022.

Their crimes resulted in the court sentencing them to prison, with the brother sentenced to 10 months and the former manager getting two years of prison time. Meanwhile, Sameer Ramani continues to remain at large. In its statement, the SEC said,

“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.”

Coinbase vs SEC

While the SEC continues to take action against people and entities related to crypto, Coinbase has been busy trying to get more clarity regarding the crypto market. The exchange filed a petition in federal court seeking a rulemaking for the digital assets industry.

However, this was shunned by the commission. It claimed that any crypto-related rule-making would take years. It further added that the enforcement action served the purpose for the time being.

The commission also noted that the crypto exchange did not demonstrate the right for making such a demand. This was because the “Mandamus was an extraordinary remedy – one that requires the petitioner to show a clear and indisputable right to relief.” The SEC further stated,

“Neither the securities laws nor the Administrative Procedure Act (“APA”) impose on the Securities and Exchange Commission (“SEC” or “Commission”) an obligation to issue the broad new regulations regarding “digital assets” Coinbase has requested (…) But no statue or regulation requires the Commission to take such action on a specific timeline.”