Coinbase Wins $470k Restitution in Insider Trading Case
- Nikhil Wahi, the brother of former Coinbase product manager, Ishan Wahi, has agreed to pay the crypto exchange $470,000 in restitution.
- The amount must be paid in full within 20 years of Nikhil Wahi’s release from prison.
- The money represents the amount that Coinbase had to spend on legal services relating to the Department of Justice’s investigation.
- Ishan Wahi, his brother Nikhil Wahi, and their associate Sameer Ramani have been found guilty in an insider trading case.
The insider trading case brought against a former employee of the leading crypto exchange in the United States, Coinbase, made several headlines last year, and the trust in the crypto exchange took a long time to be rebuilt. It is crucial to note that the exchange had sued the brother of a former employee in the insider trading case, and as per a confirmation from the company, the guilty party will have to pay $470,000 in restitution to the exchange.
As per a New York District Court filing that was made public on April 10 but signed on April 6, the brother of former Coinbase product manager Ishan Wahi, Nikhil Wahi, will be required to pay restitution from inside the prison to the crypto exchange for orchestrating the insider trading scheme. This is considered the first insider trading case in the crypto industry.
The amount must be paid in full within 20 years of Nikhil Wahi’s release from prison and represents the amount that Coinbase had to spend on the legal services relating to the Department of Justice’s (DoJ) investigation. It is crucial to note that in September last year, Ishan Wahi pleaded guilty to insider trading based on confidential information obtained from his brother and is currently in prison for over 10 months for wire fraud conspiracy charges after being sentenced on January 10.
Brian Armstrong, the CEO of the Coinbase crypto exchange, announced in July 2022 that the exchange had narrowed down three suspects in the insider trading case.
“This is a great reminder for everyone in crypto, and at Coinbase, that frontrunning is illegal and erodes trust. We will investigate and refer bad actors to law enforcement, and they will face real legal consequences including serving prison time,” said Armstrong.
It is crucial to note that prosecutors argued in court that because of his position at the crypto exchange, Ishan Wahi knew about the listings on Coinbase and passed on the information to his brother and an associate of theirs, Sameer Ramani, prior to the listing process. Once the announcement was made that the tokens were listed, their prices generally rallied, and the three would sell their holdings when the prices peaked.
The prosecutors allege that Nikhil Wahi made $892,500 in profit from the information that his brother passed on to him. It is important to mention here that while Coinbase did condemn the activities of the brothers and their associate, the crypto exchange also supported them in a case against the United States Securities and Exchange Commission (SEC).
The crypto exchange stated in a separate civil case by the SEC against the brothers and their associate for violating antifraud provisions of US securities laws that the case should be dismissed because the regulator had no jurisdiction to file a lawsuit given the tokens in question do not pass the Howey test, a test required to confirm that an asset is a security.
As reported earlier by BitcoinWisdom, Armstrong has asked for the election of pro-crypto lawmakers in the United States after his company received a Wells Notice from the SEC over the crypto exchange’s staking and other services.
“We are going to elect pro-crypto candidates in this country to make sure that our success is ensured,” said Armstrong.