SEC reaches ‘agreement in principle’ to resolve insider trading case of Coinbase product manager

The United States Securities and Exchange Commission is moving forward with a resolution of the case against a former product manager at Coinbase Global accused of insider trading.

In an April 3 filing in the US District Court for the Western District of Washington, the SEC saying had reached "an agreement in principle" with Ishan Wahi. The former Coinbase employee, along with his brother Nikhil Wahi and his associate Sameer Ramani, allegedly used sensitive information they obtained from the cryptocurrency exchange to cash in on new token listings, totaling more than $1 million.

“Any settlement recommended by SEC staff must be reviewed within the SEC and approved by SEC commissioners before it can be submitted to the Court for approval, a process that can take several weeks,” the filing says.

Authorities they arrested Ishan and Nikhil in July 2022, allegedly attempting to fly to India, and both brothers subsequently pleaded guilty to parallel criminal insider trading charges. According to the April 3 filing, the SEC had been engaging in "good faith discussions" with Nikhil, who was sentenced to 10 months in prison in January.

The case against the Wahi brothers was one of the first involving insider trading at a major US cryptocurrency exchange before platforms like FTX and Celsius filed for bankruptcy. The original complaint alleged that Ishan had access to information about the listing of cryptocurrencies on Coinbase-controlled exchanges in his position as product manager from August 2021 to May 2022. He then passed that information on to his brother or Ramami to invest in. the tokens before the listing on Coinbase was expected to cause a price jump.

Related: Coinbase Files Brief In SEC Wahi Case, Says It Doesn't Sell Securities But Would Like To

Notable in the context of the SEC cracking down on cryptocurrencies, the case saw regulator label nine of the tokens as "crypto-asset securities" that fall within its purview. The SEC later issued a notice of Wells - warning of possible enforcement action - to Coinbase itself in March. The exchange's legal director, Paul Grewal, said the notice came despite much discussion with SEC representatives.

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