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The U.S. Securities and Exchange Commission (SEC) has announced insider trading charges against a former Coinbase manager, who has been arrested and is also facing criminal charges. The regulator has identified nine crypto tokens as securities in the complaint. U.S. Attorney Damian Williams says it is “the first-ever insider trading case involving cryptocurrency markets.”
The U.S. Securities and Exchange Commission (SEC) announced Thursday “insider trading charges against a former Coinbase product manager, his brother, and his friend.”
The SEC detailed: “While employed at Coinbase, Ishan Wahi helped to coordinate the platform’s public listing announcements that included what crypto assets or tokens would be made available for trading.” The regulator added that from at least June 2021 to April 2022:
In breach of his duties, Ishan repeatedly tipped the timing and content of upcoming listing announcements to his brother, Nikhil Wahi, and his friend, Sameer Ramani.
“Nikhil Wahi and Ramani 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. The long-running insider trading scheme generated illicit profits totaling more than $1.1 million,” the SEC noted.
The nine crypto asset securities named in the SEC complaint are AMP, RLY, DDX, XYO, RGT, LCX, POWR, DFX, and KROM.
The securities watchdog charged Ishan Wahi, Nikhil Wahi, and Ramani with “violating the antifraud provisions of the securities laws.” The regulator is seeking “permanent injunctive relief, disgorgement with prejudgment interest, and civil penalties.”
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York also announced criminal charges against all three individuals Thursday.
According to an announcement posted by the Department of Justice (DOJ), the three are charged “in connection with a scheme to commit insider trading in cryptocurrency assets by using confidential Coinbase information about which crypto assets were scheduled to be listed on Coinbase’s exchanges.”
Ishan Wahi and Nikhil Wahi were arrested Thursday morning in Seattle, Washington. However, Sameer Ramani remains at large.
U.S. Attorney Damian Williams commented:
Just last month, I announced the first-ever insider trading case involving NFTs, and today I announce the first-ever insider trading case involving cryptocurrency markets.
FBI Assistant Director Michael J. Driscoll said: “The defendants made illegal trades in at least 25 different crypto assets and realized ill-gotten gains totaling approximately $1.5 million.”
All three individuals are charged with “two counts of wire fraud conspiracy and two counts of wire fraud, each of which carries a maximum sentence of 20 years,” the DOJ noted.
The Justice Department announced the first-ever insider trading case involving non-fungible tokens (NFTs) in June. The defendant allegedly used NFT platform Opensea’s confidential information about what products were going to be featured on its homepage “to secretly purchase dozens of NFTs shortly before they were featured,” the DOJ detailed.
