Indian American brothers agree to settle crypto insider trading charges

Former Coinbase product manager Ishan Wahi and brother Nikhil Wahi get two years and 10 months jail

Former Coinbase product manager Ishan Wahi and his brother, Nikhil Wahi, have agreed to settle charges that they engaged in an insider trading scheme regarding at least nine crypto asset securities.

Ishan and Nikhil Wahi each agreed to be permanently enjoined from violating Section 10(b) of the Securities Exchange Act and Rule 10b-5 and to pay disgorgement of ill-gotten gains, plus prejudgment interest, the US Securities and Exchange Commission (SEC) announced Wednesday.

Read: Indian American pleads guilty in first-ever crypto insider trading case (September 14, 2022)

An SEC complaint, filed on July 21, 2022, in a district court in Washington, alleged that while employed at the crypto exchange platform, Ishan helped to coordinate the platform’s public listing announcements that included what crypto assets would be made available for trading.

According to the complaint, Coinbase treated such information as confidential and warned its employees not to trade on the basis of, or tip others with, that information.

However, in breach of his duties from at least June 2021 to April 2022, Ishan repeatedly tipped the timing and content of upcoming listing announcements to Nikhil and his Indian American friend, Sameer Ramani of Houston.

Ahead of those announcements, which usually resulted in an increase in the assets’ prices, Nikhil 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.

Read: 3 Indians charged in $1.5 million cryptocurrency insider trading scheme (July 22, 2022)

The Wahi brothers agreed, as part of the settlement, not to deny the SEC’s allegations.

“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.

“The federal securities laws do not exempt crypto asset securities from the prohibition against insider trading, nor does the SEC,” he added.

Subject to court approval, Ishan and Nikhil consented to the entry of final judgments that permanently enjoin them from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

Read: 2 Indian brothers agree to settle charges in crypto insider trading scheme in US (May 31, 2023)

In the criminal action, Ishan and Nikhil pled guilty to conspiracy to commit wire fraud.

Ishan was sentenced to 24 months in prison and Nikhil was sentenced to 10 months in prison and ordered to forfeit $892,500.