The Securities and Exchange Commission (SEC) announced Tuesday that former Coinbase manager Ishan Wahi and his brother Nikhil Wahi have agreed to settle insider trading charges using knowledge of the exchange.

The former was forced to give up 10.97 ETH ($20,848.92) and 9,440 USDT, while the latter was forced to give up $892,500.

The End of Crypto’s First Insider Use Case

According to the SEC Press releaseThe brothers’ fines represent penalties for the return of ill-gotten gains from their business plan, plus anticipated interest.

The brothers, plus one of their friends, Sameer Ramani, were indicted by the Justice Department in July 2021 in the first insider trading case involving cryptocurrency. Specifically, Ishan Wahi was accused of giving his brother and friend information about soon-to-be-listed coins on Coinbase, who would buy them ahead of the public listing announcements.

“Coinbase treated such information as confidential and cautioned its employees not to trade on the basis of that information or inform others,” the SEC explained.

Analysis has shown that public listings on popular exchanges have a large appreciative impact on a coin’s price. In fact, prosecutors alleged that the co-conspirators made profits of $1.5 million in 55 different token trades between June 2021 and April 2022.

Although Ishan Wahi initially fought accusations against him, finally pleaded guilty to two counts of conspiracy to commit wire fraud in February. His brother already did the same in September, lamenting that his crime was “something I will have to live with forever.”

SEC Punishment

Both brothers agreed not to deny the SEC’s allegations as part of the settlement agreement.

Although Nikhil paid the higher fine, he will only spend 10 months behind bars, unlike his brother 2 years in prison.

The SEC said that at least nine of the assets purchased by the group “were securities,” challenging Coinbase’s claims that the exchange does not list any securities. Ishan Wahi’s lawyers challenged these claims in February, and Coinbase continues to dispute with the agency over the legal classifications of cryptocurrencies as a whole.

“Federal securities laws do not exempt cryptocurrency securities from the prohibition against insider trading, and neither does the SEC,” Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, said in the filing. agency. “I am grateful to the SEC staff for successfully working to resolve this matter.”

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