An ex-Coinbase product manager was charged on Thursday with insider trading for passing along tips about upcoming listings of tokens on the crypto exchange.
The SEC charged Ishan Wahi and his brother, Nikhil Wahi, and friend Sameer Ramani in federal district court in Seattle.
Ishan Wahi, who worked on Coinbase's announcements of newly listed crypto tokens, allegedly passed information about the listings to his brother and Ramani, who purchased at least 25 crypto assets from June 2021 to April 2022.
The SEC in its release alleged that at least nine of the 25 assets were securities, but did not indicate which ones it considered securities. Those designations will likely be of intense interest to the industry, since the SEC has not publicly identified many tokens that it considers securities and which are hence subject to strict regulation by the commission.
Coinbase's listings of tokens have attracted considerable interest, because a listing on the crypto exchange usually draws in more trading activity and liquidity. Prices often rise after a listing, either because of the increased liquidity, speculative betting or a combination of both. Some parties scoured Coinbase activity and documents to glean insights into tokens it might list.
The three earned more than $1.1 million through the benefits of the inside information, the SEC alleges.
The Seattle federal complaint charges the three with antifraud violations of securities laws, and another coordinated complaint in the Southern District of New York includes criminal charges against them.
In April, Coinbase announced it would post a list of tokens that it was considering listing to increase transparency. Coinbase said its changes would improve "information symmetry."
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