A former product manager at Coinbase has pleaded guilty to crypto insider trading charges. Ishan Wahi, 32, admitted to sharing confidential information about cryptocurrencies the San Francisco-based exchange would be listing in a scheme that generated approximately $1.1 million in profits.
First Of Its Kind Guilty Plea
In one of the first such pleas in a U.S. federal court by an individual, ex-Coinbase manager Ishan Wahi pleaded guilty to two counts of conspiracy to commit wire fraud in the first-ever insider trading case involving cryptocurrency. Wahi had pleaded not guilty to wire fraud charges in August, but he changed his plea during a recent hearing.
The former Coinbase employee is guilty of sharing information about upcoming new cryptocurrency listings with his brother Nikhil Wahi and a college friend, Sameer Ramani. Nikhil pleaded guilty to a single count of wire fraud back in September and was sentenced to 10 months in prison.
The U.S. Attorney for the Southern District of New York, Damian Williams, asserted that insider trading is a serious federal crime regardless of whether it is in the stock market or the crypto world. As such, the office is set to use its vast experience in pursuing insider trading cases to prosecute this offence to the fullest extent of the law.
Wahi is facing up to two decades in prison and is expected to be sentenced by U.S. District Judge Loretta A. Preska on May 10, 2023.
Wahi Files Motion To Dismiss Securities Fraud Charges
Ishan Wahi is fighting the U.S. Securities and Exchange Commission.
Wahi’s legal team has filed a motion to dismiss charges laid against him by the securities watchdog. When the SEC charged the former Coinbase employee in late July, the commission alleged that at least 9 of the 25 crypto assets the insider and his associates were trading were, in fact, securities. The lawyers, however, argued that the tokens sold in the secondary market do not qualify as securities.
“The SEC wants to broadly regulate digital assets. But rather than obtain such authority from Congress, the SEC has sought to achieve it through the courts by way of this precedent-setting action against Ishan and Nikhil Wahi,” the court filing reads. “In so doing, the SEC seeks to distort the federal securities laws beyond all recognition and win for itself regulatory domain over an entirely new industry. That gambit is an abuse of power […] And this Court should reject it.”
The SEC has until April 6 to file its opposition response to Wahi’s motion to dismiss. Should the motion be granted, it would be a breakthrough moment for crypto fans who believe the SEC is seriously overstepping the bounds of its legal authority. More importantly, it could lead to the creation of a clear and comprehensive regulatory framework for cryptocurrencies in the U.S.