The brother of a former Coinbase employee has agreed to pay the cryptocurrency exchange nearly $470,000 for his role in an insider trading scheme.
Nikhil Wahi, the brother of former Coinbase product manager Ishan Wahi, will be ordered to start paying restitution while serving his sentence, according to New York District Court documents signed on April 6 and made public on April 10, in what is believed to be the first case involving cryptocurrency. insider trading case. The payment, which must be paid in full within 20 years of Nikhil’s release from prison, represents the amount Coinbase has spent on legal services related to the Justice Department’s investigation.
Nikhil, who pleaded guilty in September 2022 to instigating transactions based on confidential information obtained from his brother, is currently serving 10 months in prison for conspiracy to commit wire fraud after being sentenced on January 10.
Because of his position at Coinbase, prosecutors allege Ishan knew when the exchange would list new cryptocurrencies and notified his brother Nikhil and their partner Sameer Ramani before publicly announcing the listing of the asset. The price of the cryptocurrency generally rose after the listing, netting Nikhil $892,500, according to prosecutors. As part of the sentence, Nikhil was ordered to forfeit the funds to the U.S. government.
In a separate civil case, Coinbase defended the brothers and Ramani after the trio were indicted by the SEC for violating the antifraud provisions of U.S. securities laws. In a friend-of-the-court briefing on March 13, Coinbase said it condemned the defendants’ actions but supported a motion to dismiss the case because it argued the SEC had no standing to sue given the tokens in question failed the Howey test – Assess U.S. legal principles governing whether an asset is a security.
The SEC said in an April 3 filing that it had reached an "agreement in principle" with Ishan to resolve the SEC's claims and was also in "good faith discussions" with Nikhil.
