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- The U.S. Attorney’s Office said that the three accused profited from using confidential Coinbase information for future token listings.
- The U.S. SEC has accused Coinbase of listing tokens that were securities but Coinbase refutes and issues a sharp response.
On Thursday, July 21, three executives at Coinbase have been charged for insider trading said Damian Williams, the United States Attorney for the Southern District of New York.
The Attorney charged Ishan Wahi, Coinbase’s former product manager, his brother Nikhil Wahi and friend Sameer Ramani, with wire fraud conspiracy. The charges accuse all three of being hand-in-gloves for cryptocurrency insider trading. The charges also allege that all three accuse confidential Coinbase information of the crypto assets schedule for future listing on Coinbase. Speaking on the matter, U.S. Attorney Damian Williams said:
Today’s charges are a further reminder that Web3 is not a law-free zone. Just last month, I announced the first ever insider trading case involving NFTs, and today I announce the first ever insider trading case involving cryptocurrency markets.
Our message with these charges is clear: fraud is fraud is fraud, whether it occurs on the blockchain or on Wall Street. And the Southern District of New York will continue to be relentless in bringing fraudsters to justice, wherever we may find them.
The U.S. Attorneys further noted that Ishan Wahi attempted to flee to India ahead of Coinbase’s scheduled interview by its security department. However, the law enforcement interrupted and prevented them from leaving.
SEC slaps separate filing, accuses Coinbase of listing securities
The U.S. Securities and Exchange Commission (SEC) has also filed separately on the insider trading case. Carolyn M. Welshhans, Acting Chief of the Enforcement Division’s Crypto Assets and Cyber Unit said:
In nearly a year, the defendants collectively earned over $1.1 million in illegal profits by engaging in an alleged insider trading scheme that repeatedly used material, nonpublic information to trade ahead of Coinbase listing announcements.
As today’s case demonstrates, whether in equities, options, crypto assets, or other securities, we will vindicate our mission by identifying and combatting insider trading in securities wherever we see it.
Interestingly, the SEC further classified 9 of these traded assets as “securities”. However, Coinbase has come out with a sharp response to the SEC charges of trading securities. Coinbase’s chief legal officer Paul Grewal wrote a blog post: “Coinbase does not list securities. End of story”.
Quoting CFTC Commissioner Caroline Pham, Grewal reiterated that this is “a striking example of ‘regulation by enforcement” by the SEC. Coinbase announced that it completely disagrees with the SEC’s charge of securities fraud. Coinbase’s chief legal officer Paul Grewal further added:
Seven of the nine assets included in the SEC’s charges are listed on Coinbase’s platform. None of these assets are securities. Coinbase has a rigorous process to analyze and review each digital asset before making it available on our exchange — a process that the SEC itself has reviewed.
Related: Coinbase clarifies the allegation of selling user data to authorities
