The U.S. authorities sentenced Coinbase‘s former Product Manager to two years in jail for insider trading, according to Reuters.
On May 9, 2023, the prosecutors decided Ishan Wahi’s sentence for participating in a scheme that involved “massive abuse” of Coinbase’s trust, the Reuters article noted.
Background of the case
In January, Ishan Wahi’s brother Nikhil Wahi got sentenced to 10 months in prison for the same reason – making trades based on confidential Coinbase information. At the time, Nikhil Wahi admitted that it was his brother Ishan Wahi who leaked the information to him and his friend, Sameer Ramani.
Based on the information Ishan Wahi leaked, Ramani and Nikhil Wahi used anonymous wallets and made over $1 million on trades between July 2021 and May 2022. Ishan Wahi was arrested together with his brother, Nikhil Wahi, in January. However, Ishan Wahi pleaded not guilty, while Ramani was outside the U.S. borders.
In February, Ishan Wahi filed a lawsuit and asked the U.S. authorities to dismiss the charges against him. Wahi claimed the Securities and Exchange Commission (SEC) lacked legal authority to classify tokens as securities. Wahi’s lawyers contended that the assets and asset holders involved in the case were not a part of any “common enterprise” since tokens are not considered an investment contract. Therefore, the insider trading charges were inapplicable.
The court decision
According to Reuters, Wahi said he “made a huge mistake” that will follow him for the rest of his life. Assistant U.S. Attorney Noah Solowiejczyk responded by stating that this was not a simple “one-off mistake” but a stream of tips scattered over ten months.
Wahi asked the court for a sentence that was no longer his brother’s. During his brother Nikhil Wahi’s hearing, the prosecutors recommended Nikhil Wahi be sentenced to prison for at least ten months. Nikhil Wahi’s defense lawyers managed to settle for the least by claiming that 26-year-old Wahi’s primary motivation was to repay his college debt, and he hadn’t been arrested before.
In the case of Ishan Wahi, the prosecutors recommended he spend more than three years in jail. Ishan Wahi noted that other crypto-related insider trading cases usually resulted in little or no prison time. However, the court sentenced him to two years in prison for the civil counterpart of using deception to seek financial gain.
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