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US District Judge stated that the attempts by the former Coinbase manager and other participants of the case to cover up their scheme indicate that knew their actions were wrong.
A former Coinbase product manager has been sentenced to two years in prison in an insider trading case. This is the first insider trading case involving cryptocurrency.
Ishan Wahi aged 32, along with his brother Nikhil and friend Sameer Ramani, made more than $1.5 million over 10 months by investing in new coins and tokens before they were listed on Coinbase. The former executive had prior knowledge of what assets were to be listed on the exchange and would invest only to sell them after they were listed and increased in value.
Prosecutors in the Southern District of New York charged the former Coinbase manager Wahi with two counts of conspiracy to commit wire fraud, to which he pleaded guilty in February. Commenting on the case on Tuesday, US Attorney Damian Williams of the U.S. Attorneys Office for the Southern District of New York announced stated that by sharing information about the listings, Wahi had “violated the trust placed in him by his employer”.
“Today’s sentence should send a strong signal to all participants in the cryptocurrency markets that the laws decidedly do apply to them. The Southern District of New York will hold those who engage in insider trading to full account, regardless of whether their illegal conduct occurs in the equity markets or in the market for crypto assets”, Williams added.
US District Judge Loretta Preska stated during sentencing that the trio’s attempt to cover up their scheme indicates that knew their actions were wrong.
The court also sentenced Nikhil, who in September pleaded guilty to conspiracy to commit wire fraud, to 10 months in prison. The prosecution had initially sought a three-year sentence for Ishan Wahi to deter other insiders from abusing corporate information. Citing other insider trading cases and their subsequent sentences, Wahi asked the court for a sentence not longer than his brother’s.
The US Justice Department has the authority to charge fraud in cases in which financial gain was sought using dubious means regardless of the nature of the asset involved. This gives it more room to track and prosecute crypto-related crimes. Its counterpart, the US Securities and Exchange Commission (SEC) – which has, in recent months launched a crackdown on crypto business – is limited to overseeing the securities markets.
The regulator has insisted that many digital assets are securities. On this basis, the SEC filed a separate lawsuit against the three in July 2022. Ishan Wahi has reached an agreement in principle to settle the claims while his brother is still n settlement talks with the regulator.