Ishan Wahi, a former manager of Coinbase, and his brother, Nikhil Wahi, agreed to settle allegations of insider trading using information obtained from the exchange, the Securities and Exchange Commission (SEC) stated on Tuesday.
The former has been forced to forfeit 10.97 ETH ($20,848.92) and 9,440 USDT, while the latter was made to forfeit $$892,500.
The SEC’s news release states that the brothers’ fines are prejudgment interest in addition to penalties for disgorgement of illegal proceeds from their trading scheme.
The brothers were prosecuted by the Department of Justice in July 2021 in the first-ever insider trading case involving cryptocurrency, along with one of their friends, Sameer Ramani. Specifically, Ishan Wahi was accused of tipping his brother and friend with information about coins that would soon be listed at Coinbase, who would buy them in advance of public listing announcements.
“Coinbase treated such information as confidential and warned its employees not to trade on the basis of, or tip others with, that information,” explained the SEC.
Nikhil will only serve 10 months in prison as opposed to his brother’s 2-year term. The SEC declared that at least nine of the assets the group bought “were securities,” confounding Coinbase’s assurances that the exchange doesn’t list any securities. In February, Ishan Wahi’s attorneys disputed these assertions, and Coinbase is still at odds with the organization about how to categorize cryptocurrency as a whole legally.