The US Securities and Exchange Commission (SEC) has announced that former Coinbase manager Ishan Wahi and his brother Nikhil Wahi have agreed to settle insider trading charges. The SEC filed a complaint against the brothers in July, alleging that Ishan Wahi provided insider information to his brother and his friend Sameer Ramani about which cryptocurrencies would be available to trade on Coinbase. This allowed them to profit when the value of the cryptocurrencies increased. The Wahi brothers have also pleaded guilty to conspiracy to wire fraud in a separate criminal case.
Details of the Settlement
The terms of the settlement include the Wahi brothers agreeing not to deny the SEC’s allegations. They have agreed to settle the charges without admitting or denying the allegations. The settlement also does not require them to pay any additional penalties in addition to those due for the separate criminal case. The SEC has not made any legal conclusions about the security status of tokens as part of the settlement.
Impact on Coinbase
Coinbase is currently under investigation by the SEC after receiving a Wells notice. This means that the SEC is prepared to recommend formal charges to its five-member commission. The case involves nine cryptocurrencies that the SEC has deemed to be securities, but this issue was not addressed in the settlement with the Wahi brothers.
According to Rodrigo Seira, crypto counsel at Paradigm, the settlement with the Wahi brothers is a “meaningful development for the industry.” He noted that the settlement does not require the brothers to admit any legal conclusions about the security status of tokens, and it does not require them to pay any additional penalties beyond those incurred in the separate criminal case.
The settlement between the Wahi brothers and the SEC marks a significant development in the ongoing investigation of Coinbase. While the settlement does not address the issue of whether certain cryptocurrencies are securities, it does demonstrate the SEC’s commitment to rooting out insider trading and other illegal activities in the cryptocurrency market. The impact of this settlement on Coinbase and the wider industry remains to be seen.