A former Coinbase manager and his brother have agreed to settle insider trading charges brought by a US regulator.
Ishan Wahi and his brother, Nikhil Wahi, agreed to settle those charges on Tuesday, according to the US Securities and Exchange Commission.
The SEC filed a complaint against the brothers in July, alleging that Ishan Wahi helped his brother by tipping him and his friend, Sameer Ramani, about what crypto would be available to trade on Coinbase and thus profited when the value of the crypto went up.
“While the technologies at issue in this case may be new, the conduct is not. We allege that Ishan and Nikhil Wahi, respectively, tipped and traded securities based on material nonpublic information, and that’s insider trading, pure and simple,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement in a statement.
The Wahi brothers also agreed not to deny the SEC’s allegations, the agency said.
Ishan and Nikhil Wahi have both pleaded conspiracy to wire fraud in a separate criminal case, where Ishan Wahi was sentenced to two years and Nikhil Wahi was sentenced to 10 months.
Coinbase is under the SEC’s microscope after it handed the exchange a Wells notice, which means that it is ready to recommend formal charges to its five-member commission.
Securities in question
A focal part of the case were nine cryptocurrencies that the SEC deemed to be securities, but that did not seem to be answered in the case.
In its original complaint, the SEC said those nine cryptocurrencies were securities, but lawyers representing the brothers argued in a separate filing that they were not because the nine in question were sold in the secondary market.
Rodrigo Seira, crypto counsel at Paradigm, called the settlement a “meaningful development for the industry.”
“Today’s SEC settlement (i) doesnt admit any legal conclusions about the security status of tokens; (ii) doesnt require Wahi to pay any additional penalties (in addition to those due for separate criminal case),” Seira tweeted on Tuesday.