Key takeaways:
- The former product manager of Coinbase was given a two-year prison term for insider trading by American authorities.
- Ishan Wahi was convicted for participating in a plan involving “massive abuse” of Coinbase’s confidence.
Ishan Wahi, a former product manager at Coinbase Global who was charged with insider trading, has been given a 24-month prison term by a federal judge.
Judge Loretta Preska sentenced Wahi to two years in prison at a hearing on May 9 in the Southern District of New York’s United States District Court for his part in utilizing confidential information he received while working at Coinbase to generate up to $1.5 million in profit from new coin listings. He will have two years of concurrent supervised release following his sentence in jail for each offense.
Ishan Wahi was convicted for participating in a plan involving “massive abuse” of Coinbase’s confidence. Nikhil Wahi, the brother of Ishan Wahi, was sentenced to 10 months in prison in January for the same offense: executing trades using secret Coinbase information. At the time, Nikhil Wahi acknowledged that it was his brother Ishan Wahi who had told him and his buddy Sameer Ramani about the information.
Ramani and Nikhil Wahi used anonymous wallets and transacted over $1 million between July 2021 and May 2022, according to information that Ishan Wahi disclosed. Ishan Wahi and his brother Nikhil Wahi were taken into custody in January. While Ramani was outside American territory, Ishan Wahi entered a not-guilty plea.
Ishan Wahi filed a lawsuit in February, asking the American authorities to drop the charges they had brought against him. Wahi argued that the Securities and Exchange Commission’s (SEC) classification of tokens as securities was illegal. Since tokens are not regarded as investment contracts, Wahi’s attorneys argued that the assets and asset holders involved in the case were not a part of any joint company. The charges of insider trading were invalid.
Wahi claimed he “made a huge mistake” that will haunt him forever. In response, Assistant U.S. Attorney Noah Solowiejczyk said this wasn’t just a single-off error and a series of tips collected over ten months.
Wahi pleaded with the judge for a sentence that wasn’t his brother’s anymore. The prosecution recommended that Nikhil Wahi receive a prison term of at least ten months during his hearing. Nikhil Wahi’s defense attorneys were able to reach a settlement by asserting that the 26-year-old Wahi’s main goal was to pay back his college debt and that he had never been detained before.
The prosecutors recommended Ishan Wahi to serve more than three years in prison. Ishan Wahi stated that past insider trading instances involving cryptocurrency typically ended in minimal or no prison sentence. However, the civil equivalent of employing falsehood to pursue financial advantage resulted in the court giving him a two-year prison term.
On Tuesday, Coinbase’s general counsel requested that the SEC make a number of amendments to its proposed rule regarding RIAs’ responsibilities to keep client assets with certified custodians.
