Former Coinbase product manager Ishan Wahi, his brother Nikhil Wahi and friend Sameer Ramani were accused of insider trading last month.
According to Reuters, Ishan Wahi appeared in front of a Manhattan federal court yesterday and pleaded not guilty.
He and Ramani are being accused of obtaining information about which cryptocurrencies would be listed on Coinbase in advance and use this insider information to trade the altcoins. Wahi and Ramani allegedly acquired these altcoins pre-listing and traded them 14 times, resulting in at least $1.5 million in profits.
The lawyer of the defendant, David Miller, argued that Wahi wasn’t engaging in insider trading since there were no securities involved in the first place. Miller is obviously trying to use the current “grey zone” in how Coinbase and cryptocurrencies are regulated.
The Securites and Exchange Commision (SEC) and U.S. Commodity Futures Trading Commission (CFTC) are still figuring out how Bitcoin, Ethereum and other altcoins should be treated.
The SEC is currently probing Coinbase on the basis of unregistered securities.
The lawyer of the defendant also argued that information about which coins would be listed on Coinbase was not confidential. Miller mentioned that Coinbase tested new tokens before publicly listing them, which means the information Wahi is accused of sharing wasn’t confidential or insider information.
The entire case is definitely curious, given the lack of clarity surrounding Coinbase as well as the tokens it lists. Is Coinbase a National Securities Exchange like the SEC argues? Are tokens other than bitcoin unregistered securities?
Regulators are still figuring out the answers to these questions, which could have implications for Ishan Wahi’s case. Regardless of the outcome, Coinbase has received a lot of heat in recent months.
From laying off large parts of its workforce, the Coinbase (COIN) stock plunging, Cathie Wood panic-selling her shares, the SEC looking into Coinbase for listing unregistered securities and the recent insider trading charges, Coinbase certainly hasn’t had an easy year.
