The Securities and Exchange Commission has charged a former Coinbase product manager, his brother, and his friend with insider trading.
The three individuals stand accused of perpetrating a scheme to trade ahead of multiple announcements regarding certain crypto assets that would be made available for trading on the Coinbase platform.
While employed at Coinbase, the SEC alleged, ex-Coinbase product manager Ishan Wahi helped to coordinate the platform’s public listing announcements that included what crypto assets or tokens would be made available for trading.
While the crypto exchange warned its employees not to trade on the basis of, or tip others with, that information, Ishan Wahi repeatedly tipped the timing and content of upcoming listing announcements to his brother, Nikhil Wahi, and his friend, Sameer Ramani, from June 2021 to April 2022.
The long-running insider trading scheme generated illicit profits totaling more than $1.1 million, according to the SEC, as the defendants 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.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, said: “We are not concerned with labels, but rather the economic realities of an offering. In this case, those realities affirm that a number of the crypto assets at issue were securities, and, as alleged, the defendants engaged in typical insider trading ahead of their listing on Coinbase. Rest assured, we’ll continue to ensure a level playing field for investors, regardless of the label placed on the securities involved.”
“In nearly a year, the defendants collectively earned over $1.1 million in illegal profits by engaging in an alleged insider trading scheme that repeatedly used material, nonpublic information to trade ahead of Coinbase listing announcements,” said Carolyn M. Welshhans, Acting Chief of the Enforcement Division’s Crypto Assets and Cyber Unit. “As today’s case demonstrates, whether in equities, options, crypto assets, or other securities, we will vindicate our mission by identifying and combatting insider trading in securities wherever we see it.”
The SEC charges Ishan Wahi, Nikhil Wahi, and Ramani with violating the antifraud provisions of the securities laws and seeks permanent injunctive relief, disgorgement with prejudgment interest, and civil penalties. The same three individuals are facing criminal charges in a parallel action by the U.S. Attorney’s Office for the Southern District of New York.