On May 30, the United States Securities and Exchange Commission (SEC) announced that Ishan Wahi, the former product manager at Coinbase, and his brother, Nikhil Wahi, had agreed to resolve charges brought by the regulator accusing them of participating in an insider trading scheme.
SEC settlement with former Coinbase product manager
Thus, the two defendants also agreed that their actions violated Section 10(b) of the Securities Exchange Act.
Consequently, Ishan has been sentenced to two years in prison, while his brother, Nikhil, will serve ten months behind bars.
In a statement, the SEC also said that the former Coinbase product manager lost 10.97 ETH and 9,440 USDT. On the other hand, Nikhil has delivered 892,500 USDT to the state.
This is part of the liquidation and forfeiture of securities that the SEC said were illegally acquired.
The case settled about a year after the SEC filed the lawsuit in U.S. District Court for the Western District of Washington, accusing the former Coinbase product manager of using confidential information to profit from trading crypto assets, most of which, according to the regulator, they were securities.
According to the Director of the SEC’s Division of Enforcement, Gurbir S. Grewal, his actions amounted to insider trading. Grewal stated:
While the technologies in question, in this case, may be new, the behavior is not. We allege that Ishan and Nikhil Wahi, respectively, tipped and traded values based on material non-public information, and that is insider trading, pure and simple.
How will the SEC handle Ethereum?
While the SEC was successful, questions are being asked about how the regulator will allow the forfeiture of those digital assets, including Ethereum, so that the regulator considers lawful and lawful.
Although there is a argument that all assets received from the two brothers will be forfeited to the Department of Justice (DoJ), some argue that the SEC must first confirm receipt.
Recently, SEC Chairman Gary Gensler did not clarify whether Ethereum, like Bitcoin, is a commodity that should be treated like property and its capital gains tax.
While in front of the House Financial Services Committee, Gensler repeatedly said that the agency was learning more about Ethereum.
This did not help ETH as a clear endorsement from the SEC, the main regulator, could lead to regulatory clarity, possibly boosting prices and on-chain activity.
The SEC’s position differs from the Commodity Futures Trading Commission (CFTC), which classifies Bitcoin, Ethereum, and Litecoin as commodities, not securities.
Still, a statement from the SEC declaring ETH a commodity is highly expected by the community and could help prices. In late 2020, the SEC sued payment company Ripple and its executives, alleging that XRP is an unregistered security. A ruling on this case is expected in the coming months.
Featured Image from Canva, Chart from TradingView
