SEC Settles Insider Trading Charges Regarding Crypto Asset Securities with Former Coinbase Manager Ishan Wahi and Nikhil Wahi

Last month, the SEC announced in a press release that it had entered into an agreement with Coinbase manager Ishan Wahi and his brother, Nikhil Wahi, “to settle charges that they engaged in insider trading through a scheme to trade ahead of multiple announcements regarding at least nine crypto asset securities that would be made available for trading on the Coinbase platform.” Press Release, U.S. Securities and Exchange Commission, Former Coinbase Manager and His Brother Agree to Settle Insider Trading Charges Relating to Crypto Asset Securities (May 30, 2023), (last visited Jun. 21, 2023). According to the press release, “from at least June 2021 to April 2022, in breach of his duties, Ishan repeatedly tipped the timing and content of upcoming listing announcements to his brother, Nikhil Wahi, and his friend, Sameer Ramani.” Id. Further, “ahead of those announcements, which usually resulted in an increase in the assets’ prices, Nikhil Wahi and Ramani allegedly purchased at least 25 crypto assets, at least nine of which were securities, and then typically sold them shortly after the announcements for a profit.” Id. Of note, Ishan Wahi and Nikhil Wahi agreed not to deny the SEC’s allegations. Id. The litigation was initiated when the SEC filed a Complaint in the U.S. District Court for the Western District of Washington on July 21st, 2022 (this Complaint was the subject of a Faruqi & Faruqi blog post, accessible here). At the time of this settlement, the Defendants had a motion to dismiss pending. The court’s docket for Securities and Exchange Commission v. Wahi et al, Docket No. 2:22-cv-01009 (W.D. Wash. July 21, 2022), is accessible on Bloomberg Law here

This settlement is significant for at least three reasons. First, Coinbase is considered to be the largest cryptocurrency exchange based in the United States.[1]  Established in 2012, Coinbase, according to its website, boasts of $145 billion in quarterly traded volume and $130 billion in assets on platform. About Coinbase,  (last visited Jun. 21, 2023). Therefore, this settlement concerns not just another crypto company, but rather a company that is relatively well-known in the crypto space. Second, the SEC recently charged Coinbase with operating as an unregistered securities exchange, clearing agency and broker, filing a Complaint against Coinbase in the U.S. District Court for the Southern District of New York. Press Release, U.S. Securities and Exchange Commission, SEC Charges Coinbase for Operating as an Unregistered Securities Exchange, Broker, and Clearing Agency (Jun. 6, 2023), (last visited Jun. 21, 2023). And third, there was a criminal action brought against Ishan Wahi and Nikhil Wahi where both pled guilty to conspiracy to commit wire fraud in what was the first cryptocurrency insider trading case. Press Release, United States Attorney’s Office Southern District of New York, Former Coinbase Insider Pleads Guilty In First-Ever Cryptocurrency Insider Trading Case (Feb. 7, 2023), (last visited Jun. 20, 2023). Ishan Wahi was sentenced to two years in prison. Press Release, United States Attorney’s Office Southern District of New York, Former Coinbase Insider Sentenced In First Ever Cryptocurrency Insider Trading Case (May 9, 2023), (last visited Jun. 21, 2023). Nikhil Wahi, meanwhile, was sentenced to ten months. Press Release, United States Attorney’s Office Southern District of New York, Defendant Sentenced In Groundbreaking Cryptocurrency Insider Trading Case (Jan. 10, 2023), (last visited Jun. 21, 2023).
While the SEC’s settlement against Coinbase for insider trading is important in terms of holding the Defendants accountable, the case settled before the motion to dismiss was decided, which would have been a good opportunity for the District Court to adjudicate on the issue of whether the cryptocurrencies in question were securities. For example, in Ishan and Nikhil Wahi’s Motion to Dismiss, they argued that “[t]he nine tokens at issue are no more securities than are baseball cards, beanie babies, gold doubloons, the beavers from Continental Marketing, or the oranges from Howey.” ECF Dkt. No. 33 at 14. However, the real test for whether certain digital tokens are securities (which has been the subject of several recent District Court rulings[2]) will be when a Circuit Court adjudicates on the matter and when one of the parties successfully petitions the U.S. Supreme Court to hear the case. While a decision by the Supreme Court may not settle the question completely, it would undoubtedly serve as precedent and as a guide for future cases.



[1] Kevin Voigt and Andy Rosen, Coinbase Review 2023: Pros, Cons and How It Compares, nerdwallet (Jun. 6, 2023),,trading
 (last visited Jun. 21, 2023).

[2] See, e.g., Securities and Exchange v. LBRY, Case No. 21-cv-260-PB, 2022 WL 16744741, *8 (D.N.H. Nov. 7, 2022) (Court granted the SEC’s motion for summary judgment and held that “no reasonable trier of fact could reject the SEC’s contention that LBRY offered LBC as a security); Rensel v. Centra Tech, Inc., No. 17-cv-24500, 2022 WL 2103051, at *4 (S.D. Fla. May 31, 2022) (on motion for judgment upon default, District Court held that Plaintiffs sufficiently satisfied the elements for a claim under Section 12(a)(1) of the Securities Act of 1933 where “the offering of the Centra Tokens was an investment contract under the Securities Act such that Defendants sold securities by virtue of the ICO [Initial Coin Offering]” and that Plaintiff satisfied the elements of the Securities Exchange Act of 1934 and SEC Rule 10b-5), report and recommendation adopted, 2022 WL 2104210 (S.D. Fla. June 10, 2022); and SEC v. Kik Interactive, Inc., 492 F.Supp.3d 169 (S.D.N.Y. 2020) (in case involving digital tokens being offered by Kik Interactive Inc., Court granted SEC’s motion for summary judgment and held “that undisputed facts show Kik offered and sold securities without a registration statement or exemption from registration, in violation of Section 5 [of the Securities Act.]”).

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About Thomas T. Papain

Thomas T. Papain's practice focuses on securities litigation. Thomas is an associate in the firm's New York office.

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