Former Coinbase employee Ishan Wahi pleaded guilty to two counts of conspiracy to commit wire fraud Tuesday in connection to an insider-trading scheme at the exchange.
But while the Department of Justice got its desired verdict, Wahi still faces charges brought against him by the Securities and Exchange Commission (SEC). And its potential consequences extend far beyond just him.
The same day federal prosecutors filed criminal charges related to wire fraud last July against Wahi, his brother Nikhil, and their friend Sameer Ramani, the SEC piled on with civil charges and accused the three of violating securities laws as well.
The case centers on Wahi sharing information about upcoming token listings to the San Fransisco-based exchange to generate about $1.5 million in ill-gotten profits. But in its initial complaint, the SEC also claimed that at least nine of the tokens involved in the insider-trading scheme on Coinbase are illegal securities.
7/ Here, the SEC isn’t just accusing the defendants of breaking the law.
The SEC is also accusing ten unrelated, uncharged companies of breaking the law: nine for failure to register digital asset securities & one for operating an unregistered national securities exchange.
— Jake Chervinsky (@jchervinsky) July 22, 2022
Policy Counsel at the Blockchain Association Marisa Tashman Coppel told Decrypt the case could have “huge implications on the industry” if the court rules in the SEC’s favor, as it would “inhibit creators and developers’ [ability] to create assets in the future.”
Whether digital assets should be classified as securities or commodities—under the SEC or Commodity Futures Trading Commission’s (CFTC) authority—has been a contentious topic in crypto. SEC Chairman Gary Gensler has only said firmly that Bitcoin is a commodity, claiming most other cryptocurrencies are
