SEC’s Coinbase Insider Trading Case Is Coming to a Close

Ex-Coinbase product manager Ishan Wahi and his brother Nikhil could soon reach a settlement with the U.S. Securities and Exchange Commission over insider trading charges against them, according to court filings.

The SEC and the Wahis filed a joint motion on Monday asking that the Commission be given more time to respond to the Wahis’ November motion to have the charges dismissed. 

“At this time, the SEC has an agreement in principle with Ishan Wahi to resolve all of the SEC’s claims in this matter,” the attorneys wrote in the filing. “The SEC and Nikhil Wahi are also in good faith discussions that may resolve the SEC’s claims.”

The SEC filed its complaint against Wahi, his brother Nikhil, and their friend Sameer Ramani in July for allegedly reaping at least $1.1 million in illicit profits by trading tokens before Coinbase announced they would be listed on the exchange, which usually caused prices to spike. 

Coinbase didn’t confirm it at the time, but the DOJ indictment detailed how Wahi allegedly leaked insider information to his brother and Ramani. At the time, it drew attention from investors because a single wallet spent $400,000 buying tokens right before they’d been named in a Coinbase blog post. Later that month, Coinbase CEO Brian Armstrong announced that the company had changed its listing policy for new tokens.

If the Wahi case news feels like deja vu, it’s because in February, he pleaded guilty to two counts of conspiracy to commit wire fraud brought against him by the Department of Justice for the same incident that the SEC has charged him for. 

The SEC was originally supposed to reply to the Wahi’s motion to have the charges dismissed by April 6, but has asked to bump that deadline out to June 15. If the SEC does wind up responding to the motion, the Wahis will have until July 15 to file their own reply.

The case has received a lot of attention from the industry because there’s no legal precedent for proving insider trading of crypto assets, especially since there’s still no official word on which coins and tokens—if any—qualify as securities. 

Yesterday, Coinbase filed a 35-page amicus brief, arguing to have the case dismissed. In it, Coinbase calls for more constructive engagement with the SEC. 

“This case, by contrast, pursues a mistaken view of the law through a manifestly improper vehicle,” attorney Stephen Fogg writes on behalf of Coinbase. “It should be dismissed, so the Commission may promptly turn its attention to engaging with the public to craft a sound and sustainable crypto regulatory framework.”

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Written by Stacy Elliott on 2023-04-04 19:34:09.

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