Home » US Business & Employment News • US business news » Former Coinbase manager settles SEC insider trading charges

Former Coinbase manager settles SEC insider trading charges

By Nithya Bose in US Business & Employment News, posted May 31, 2023

The Securities and Exchange Commission has reached a settlement with a former Coinbase manager regarding insider trading allegations involving digital assets.

The agreement concludes the SEC's claims against Ishan Wahi for insider trading involving crypto assets that could be considered securities.

While Wahi will not face any financial penalties from the SEC, he has recently received a two-year prison sentence in a related criminal case.

While at Coinbase, the largest cryptocurrency exchange in the US, Wahi held a position that provided him with knowledge about which assets would be added to the trading platform.

The SEC alleged that he shared non-public information about token listings with his brother and a college friend, resulting in trading activity that violated federal investor-protection laws.

However, the settlement does not specify which tokens are considered securities, although Wahi is prohibited from denying the SEC's allegations.

SEC Enforcement Director Gurbir Grewal said the outcome supports the agency's position on Coinbase's assets.

He said: “The federal securities laws do not exempt crypto asset securities from the prohibition against insider trading, nor does the SEC.”

Wahi and his legal team from Greenberg Traurig and Jones Day had sought the dismissal of the case, arguing that the digital assets in question are not securities.

Wahi's attorney declined to comment on the settlement.

Coinbase, facing the possibility of a regulatory lawsuit, submitted a brief in Wahi's case challenging the SEC's jurisdiction over its business.

Need Career Advice? Get employment skills advice at all levels of your career

Given that Coinbase is the subject of an ongoing SEC enforcement investigation, Wahi's interests aligned with his former employer's interests, despite his termination and cooperation in the insider-trading probes.

A Coinbase spokesperson said: “We are disappointed the court will not have the opportunity to rule on important issues…that we raised in our amicus brief in the case.”

The settlement terms were disclosed in a filing made in a federal court in Seattle, where the SEC had filed the case.

Nikhil Wahi, Ishan's brother, also settled with the SEC and will not face any additional fines beyond the $892,500 he was ordered to forfeit in his criminal case.

Follow us on YouTube, Twitter, LinkedIn, and Facebook.